Russia–Ukraine War
Europe's largest land war since 1945 — the frontlines, the economics, and the long-term reshaping of NATO and energy markets.
Current Situation
Last updated: July 25, 2026
Ukraine has transitioned its economic warfare to target Russian e-commerce infrastructure, launching massive drone waves—including one strike of over 400 drones—against Wildberries logistics centers in the Moscow, Leningrad, and Tver regions. This systemic campaign coincides with intensified attacks on the Russian energy sector, hitting oil facilities in the Stavropol and Kirov regions, one as far as 1,350 km away. Russia has responded with one of its largest ballistic missile barrages of the war against Kyiv, utilizing Iskander-M and Zircon missiles, and has deployed 300-mph jet-powered Shahed drones to counter Ukrainian AI-driven interceptors.
Internal stability in Ukraine deteriorated this week, leading President Zelenskyy to dismiss Army Chief Oleksandr Syrskyi following nationwide protests. Major General Mykhailo Drapatyi has been appointed as the new Commander-in-Chief, while Zelenskyy appointed a technocratic energy executive as Prime Minister to prepare for winter. Despite this upheaval, Ukraine continues to scale its defense industry; the Pentagon ordered 2,560 drones from Skyfall and Skycutter, and the firm Skyfall is testing a new strike weapon with a minimum range of 600 km.
The conflict's economic dimensions are escalating as the EU passed its largest sanctions package to date, including a mission to board "shadow fleet" tankers in the Indian Ocean. Russia is facing a domestic fuel crisis exacerbated by refinery strikes, forcing it to import large petrol batches from India. Meanwhile, Kazakhstan has ceased piping oil to the Black Sea due to Ukrainian drone strikes on tankers. Diplomatically, a new channel opened between Secretary of State Marco Rubio and Foreign Minister Sergey Lavrov, though the Kremlin indicates it will not return certain occupied territories.
Investment implications center on the systemic disruption of Russian retail and energy logistics and the increasing precariousness of Black Sea shipping, as shipowners halt calls at Ukrainian ports. The shift toward jet-powered drones and AI-enabled interceptors signals a new technological arms race in attrition warfare. While the IMF approved a $690 million disbursement to Kyiv, the crumbling EU support for some sanction carve-outs suggests emerging fractures in the Western economic blockade.
Key variable to watch: Whether the appointment of new military and civilian leadership in Kyiv can stabilize internal unrest and successfully implement the winter energy strategy.
Background
Origins
Russia's full-scale invasion of Ukraine on February 24, 2022 was the largest land war in Europe since 1945. It was the culmination of a decade-long deterioration in Russia-Ukraine relations that had its roots in the 2014 Euromaidan revolution, which ousted the Russia-aligned President Yanukovych and set Ukraine on a pro-Western trajectory. Russia's immediate response to Euromaidan was the annexation of Crimea and the sponsorship of separatist movements in the Donbas region of eastern Ukraine — a low-intensity proxy conflict that killed 14,000 people between 2014 and 2022.
Putin's decision to escalate to a full invasion reflected several converging calculations: a belief that NATO expansion to Ukraine was an existential threat to Russian security; a conviction that Ukraine lacked the national cohesion and Western support to resist a rapid military campaign; and an assessment that the West was too divided and economically dependent on Russian energy to impose effective costs. All three calculations proved wrong.
The initial Russian campaign aimed at a rapid decapitation of the Ukrainian government — the "three-day war" plan — and failed within the first week. Ukraine's military, resupplied and trained by NATO members since 2014, held Kyiv. Russia was forced to withdraw from northern Ukraine by late March 2022 and refocus on the south and east. The war transitioned from a war of manoeuvre to a grinding attritional conflict along a 1,200-kilometre front line.
Key Actors
Vladimir Putin: Sole decision-maker on Russian war aims and strategy. Putin has defined the war in existential terms — framing it as resistance to Western aggression against Russia's sphere of influence. His stated minimum objectives have shifted over time: initially regime change in Kyiv, then annexation of four Ukrainian oblasts (declared in September 2022), now consolidation of current territorial control. His maximum objective — preventing Ukraine's integration into Western institutions — remains constant.
Volodymyr Zelensky: Ukrainian President who transformed from a television comedian into a wartime leader with genuine global standing. Zelensky's political survival has been tied to maintaining Western support. His red lines — no territorial concessions, NATO membership — have been consistent, though the practical path to both has narrowed as the war has stagnated.
Russian Military / Shoigu / Gerasimov: The Russian military underperformed dramatically in 2022, exposing severe doctrinal and logistical failures. Defence Minister Shoigu and Chief of Staff Gerasimov survived the initial failures but the military has adapted — switching to a grinding attritional strategy that better suits Russian material advantages in artillery and manpower.
NATO: The alliance has provided Ukraine with approximately $250B in military and economic support since 2022. The US, UK, Germany, Poland, and France are the largest contributors. NATO's stated policy is to help Ukraine "win" without triggering direct NATO-Russia conflict — a distinction that has required continuous recalibration as weapon deliveries escalated from small arms to tanks to F-16s to long-range missiles.
Wagner Group / Russian Paramilitary: Yevgeny Prigozhin's mutiny in June 2023 — the most significant internal challenge to Putin's authority in decades — ended with Prigozhin's death two months later. Wagner has been largely absorbed into Russian state military structures. The episode revealed genuine fragility in Russia's internal political cohesion.
China: Beijing has maintained studied neutrality while providing Russia with diplomatic cover at the UN and dual-use goods that support the war economy. China has not provided lethal military aid — a red line that, if crossed, would dramatically change the Western response calculus.
Historical Context
2014 — Euromaidan and Crimea: The Euromaidan revolution ousted Yanukovych; Russia annexed Crimea within three weeks in a hybrid operation combining special forces, local proxies, and a staged referendum. The West imposed sanctions but did not militarily intervene. Russia sponsored the Donetsk and Luhansk "People's Republics" in eastern Ukraine, starting the Donbas conflict.
2015 — Minsk Agreements: Two failed ceasefire frameworks (Minsk I and Minsk II) were negotiated under French and German mediation. Both collapsed quickly. France and Germany later admitted the agreements were intended to buy time for Ukraine to build military capacity — a revelation that destroyed any remaining Russian trust in Western diplomatic good faith.
2022 — Full Invasion: Russia's February 24 invasion with 200,000+ troops across multiple axes. Initial advance toward Kyiv failed; Russia withdrew from the north by late March. Ukraine counterattacked in the northeast (Kharkiv, September 2022) and south (Kherson, November 2022), recapturing significant territory.
2023 — Attrition and Failed Counteroffensive: Ukraine's 2023 summer counteroffensive — the most anticipated military operation in years — failed to achieve its objectives against heavily mined and fortified Russian defensive lines. The failure shifted Western debates from "how to help Ukraine win" to "how to negotiate a sustainable outcome." Russia made incremental gains in late 2023 and early 2024.
2024 — Russian Advances / Western Weapon Escalation: Russia captured Avdiivka in February 2024 after months of fighting. Western allies progressively authorised more capable weapons — Patriot air defence systems, F-16 fighters, ATACMS long-range missiles. The US and UK cleared Ukraine to use Western weapons to strike targets inside Russian territory — a significant policy shift.
2025–26 — Stalemate: The front line has stabilised with neither side capable of a decisive breakthrough. Russia's economy has adapted to sanctions through a war economy model, elevated oil revenues, and imports from China, Iran, and North Korea. Ukraine faces manpower shortages and is increasingly dependent on Western financial transfers for basic government operations.
Market Exposure
Natural Gas (Europe): Russia supplied ~40% of European natural gas before the invasion. The destruction of Nord Stream pipelines (September 2022) and subsequent sanctions ended pipeline flows. Europe replaced Russian gas with US LNG, Norwegian pipeline gas, and Algerian imports — at significant cost. European industrial competitiveness has been structurally impaired. TTF (Dutch gas benchmark) remains the key instrument; any ceasefire that reopened Russian gas flows would be sharply deflationary for European energy prices.
European Defence Stocks: The war has been the single largest catalyst for European defence rearmament in a generation. Rheinmetall (Germany), BAE Systems (UK), Thales (France), Leonardo (Italy), Saab (Sweden) have all re-rated significantly. NATO members' commitments to 2% GDP defence spending are now being exceeded by several members. This is a durable, multi-year theme.
Wheat and Agricultural Commodities: Ukraine is a top-5 global exporter of wheat, corn, and sunflower oil. The Black Sea grain corridor agreement (2022) allowed some agricultural exports to continue; its periodic suspension by Russia creates price spikes. CBOT wheat and corn are the primary instruments.
Russian Assets: Russian equities, ruble, and OFZ (Russian government bonds) are largely inaccessible to Western investors following sanctions. The $300B+ in frozen Russian central bank reserves held in European financial infrastructure (primarily Euroclear) remain a live geopolitical issue — the West is debating whether to transfer the interest income or the principal itself to Ukraine.
Reconstruction: A ceasefire or peace settlement would create one of the largest reconstruction opportunities in European history — estimated at $400–600B. Infrastructure, housing, and energy reconstruction would be the primary sectors. European construction and materials firms would be primary beneficiaries.