Kharkiv defeat has limited significance for global economy

Ukraine’s successful counteroffensive in Kharkiv in the north-east of the country has stoked hopes of a Ukraine victory and perhaps even regime-change in Russia, with global markets rallying on the news. But we think prospects of a speedy resolution to the conflict, or even a ceasefire, are remote.

What you will learn:

• We doubt Russia would be willing to enter negotiations from a position of defeat. And even a military conclusion would not necessarily result in easing supply constraints in global commodity markets.
• Russia has immediately responded by intensifying attacks on Ukraine’s energy infrastructure and is now pondering other military and economic measures.
• It now also seems more likely that the flow of gas to Europe via Ukraine will stop ahead of winter.