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- Ukraine is attacking Russian refineries, fuel networks, ports and logistics hubs, including Wildberries warehouses, while Moscow continues costly, localized advances. - Russian gasoline output has fallen below demand, refined-product exports have collapsed, fuel imports are rising and the budget deficit is widening, though the war economy remains functional. -In the Gulf, the U.S.-Iran conflict has shifted from protecting shipping to open-ended retaliation after mounting U.S. casualties. American strikes now target Iranian command, transport, power and logistics infrastructure, while Iran attacks Gulf bases and energy facilities. There’s no final offramp in sight… - Hormuz traffic has nearly stopped, oil prices have surged and a wider Red Sea crisis is possible. - China is meanwhile testing gray-zone pressure around Taiwan and restricting heavy rare-earth exports to Japan, practicing coercive leverage below the threshold of war. - President Donald Trump’s tariffs on Brazil may be strengthening President Luiz Inácio Lula da Silva by turning trade pressure into nationalist campaign fuel. - In Britain, Andy Burnham has replaced Keir Starmer as prime minister without an election, promising regional investment while retaining fiscal constraints. |
Center of Gravity
What you need to know
Ukraine doubles down on economic strangulation of Russia
Ukraine is racing to make Russia's war machine progressively more expensive to operate, hitting refineries, fuel networks, ports, and logistics hubs, while Russia leans on massed missile strikes and slow, costly ground attrition. As of July 20, the two strategies are producing measurable results at very different speeds.
Why it matters: Ukrainian strikes are generating faster, more visible economic damage than Russia is gaining territory, but neither side has found a way to force the other's collapse.
Ukraine widens deep-strike target list to commercial logistics
Ukrainian drones struck two Wildberries warehouses on the night of July 17-18, in Kotovsk (Tambov region) and Elektrostal (east of Moscow), killing seven workers at Kotovsk and injuring dozens across both sites. President Volodymyr Zelensky says the facilities served as logistics hubs for sanctioned drone and navigation components, a claim not independently verified; Wildberries calls them civilian retail sites.
The strategic shift matters more than any single strike. Ukraine appears to be expanding beyond military factories and refineries into the thousands of civilian-style warehouses handling dual-use imports, targets Russia cannot blanket with military-grade air defense.
Russia claims it intercepted 381 of roughly 400 drones launched against Moscow overnight July 19-20; neither figure is independently confirmed.
Fires and damage hit Podolsk, Domodedovo, and Odintsovo, plus a Noginsk oil depot, while a second Wildberries site in Podolsk was evacuated.
Ukraine has also hit Black Sea and Caspian Pipeline Consortium tankers, including Asia and Nissos Ios on July 19, temporarily halting loadings and forcing Russia to divert air-defense assets to protect ports and shipping.
Refinery damage becomes an economic problem, not just disruption
Russian gasoline production covered only about 65% of peak seasonal demand as of July 10, a shortfall of 40,000-45,000 metric tons a day (44,100-49,600 US tons), or roughly 35% of demand. Russia's two largest gasoline producers, Omsk and NORSI, have halted or sharply cut output, with Saratov also offline.
Omsk lost units representing 38% and 37% of its roughly 440,000 bpd capacity; NORSI's damaged unit accounted for about 53% of its capacity.
Salavat (2.7% of national refining capacity) stopped after its two main units were hit July 14, with repairs expected to take weeks or months.
This isn't full capacity destruction, since Russia can restart undamaged units, tap mothballed equipment, and reroute stocks. But repeated strikes are disrupting repairs and creating a rolling pattern of outages across the system.
Crude exports rise as refined-product exports collapse
Russian crude exports climbed to about 5.8 million bpd in June, up roughly 620,000 bpd from May, as unprocessed oil shifted to export terminals. Refined-product exports fell about 230,000 bpd to 1.91 million bpd over the same period.
Crude production stood at 8.86 million bpd in June, about 900,000 bpd below Russia's OPEC+ target; the IEA cut its forecast to 8.9 million bpd for 2026 and 8.8 million bpd for 2027.
Seaborne diesel and gasoil exports fell 39% month-on-month in June to about 1.8 million metric tons (1.98 million US tons), 46% below June 2025 levels; early July exports averaged just 214,000 bpd versus 793,000 bpd a year earlier, prompting Moscow to ban diesel exports.
Russia is now importing fuel to cover the gap, with Belarus gasoline deliveries hitting record levels (up to 6,000 metric tons, or 6,614 US tons, daily) and new seaborne imports arranged from India.
Wider economy slows as war costs compound
Russia cut its 2026 growth forecast to 0.4% after the economy contracted 0.3% in Q1. The federal budget deficit hit 5.73 trillion rubles ($73.2 billion) in the first half of 2026, about 2.5% of GDP and already above the original full-year target; the government now expects an annual deficit of at least 4.83 trillion rubles ($61.7 billion).
The central bank's benchmark rate remains at 14.25%, squeezing civilian investment and consumer demand while fuel shortages add to inflation.
Refinery attacks alone won't collapse the economy, but they impose a persistent cost across nearly every part of Russia's war effort, contingent on Ukraine sustaining drone production and re-striking repaired sites.
Ground war grinds on with no breakthrough on either side
Russia made limited advances in northern Sumy and Kharkiv oblasts over the past week, but the Institute for the Study of War recorded no confirmed advance by either side on July 18, and Ukrainian counterattacks have gained ground in the Oleksandrivka sector. Russian General Staff chief General Valery Gerasimov claimed broader Donetsk progress on July 18, though geolocated evidence doesn't support several of his claims.
Russia gained just 30 square kilometers (11.6 square miles) in June, versus 481 square kilometers (185.7 square miles) in June 2025; ISW estimates Russia suffered a net territorial loss of about 1.6 square kilometers (0.62 square miles) a day in July.
Russian procurement is shifting toward drones, motorcycles, and small assault groups instead of armored formations, a model built for micro-advances at heavy casualty cost rather than breakthrough maneuver.
The near future of this conflict
Ukrainian sources claim Russia may mobilize up to 500,000 people this autumn, though no verified order confirms it; the credible gap is that Russia has recruited only about 195,000 contract soldiers against a 409,000 annual target. Watch whether Russia opts for bonuses and forced recruitment instead of general mobilization ahead of September's parliamentary election.
The clearest near-term indicators: whether gasoline output stays below demand after repairs, whether diesel exports resume, whether crude backs up at ports due to tanker risk, and whether fuel shortages start hitting military operations rather than just civilians.
Russia's July 19 missile barrage confirmed it retains major long-range strike capacity, while Ukraine's Patriot interceptor shortage remains its most serious vulnerability, which will not be fixed anytime soon despite U.S. agreement to allow Ukraine to produce its own Patriots.
Known Unknowns: The impact of U.S. tariffs on international trade & especially the U.S. bond market. Whether U.S./Israel war on Iran will return to high intensity operations. What impact this war will have on the global economy. Relations of new Syrian government with Israel, international community & ability to maintain stability inside Syria. China’s triggers for military action against Taiwan. U.S. and allied responses to China’s ‘grey zone’ warfare in the South China Sea and north Asia. Ukraine’s ability to withstand Russia’s war of attrition. The potential for the jihadist insurgency in Africa’s Sahel region to consolidate and spread.
The Middle East
Birthplace of civilization
US-Iran war shifts from shipping defense to open-ended retaliation
Washington conducted a ninth consecutive night of strikes against Iran, expanding its target list from coastal missile and drone facilities to military command centers, communications networks, transport infrastructure, air defenses, and logistics sites across southern and northwestern Iran.
Explosions hit Tabriz, Chabahar, Konarak, Bandar Mahshahr, Bandar Imam Khomeini, Sirik, and Jask on July 20.
Tehran says US strikes over the past three weeks have killed at least 50 people and wounded more than 500, though figures are difficult to verify.
Iran reports damage to roads, bridges, tunnels, electricity facilities, and desalination infrastructure, concentrated around Hormozgan province.
US casualties mount and change the political calculus
The most consequential Iranian retaliation came July 17, when missiles and drones struck a US-used military base in Jordan, killing two US service members, leaving one missing, and hospitalizing four. A third US soldier died July 18 in northern Iraq during the controlled destruction of a downed Iranian attack drone.
Total US military deaths since the war began have reached 17, with more than 420 wounded.
Trump ordered further strikes explicitly framed as retaliation for these losses, a shift from the campaign's original shipping-protection rationale.
Iran spreads attacks across Gulf states, avoids Israel directly
Iran continues launching missiles and drones against Kuwait, Bahrain, Jordan, and Qatar rather than concentrating fire on Israel. Kuwait intercepted several projectiles, but an oil facility was damaged and workers and emergency personnel were injured; power and desalination facilities also took hits, sparking fires without destabilizing the national grid.
Bahrain repeatedly activated air-raid warnings after Iran claimed attacks on Sheikh Isa Air Base and an intelligence facility, prompting a US Embassy warning about risk to central Manama.
Jordan intercepted missiles aimed at Aqaba on July 20, and Israeli defenses activated near Eilat to stop falling debris, though Israel itself has not been directly targeted.
Saudi warning systems activated around Al-Kharj and Yanbu on July 18, though Riyadh has not confirmed the incident and Tehran has not claimed it.
Hormuz traffic nearly stops, splitting maritime control
The Strait of Hormuz remains the central battlefield, with Iran vowing to block oil, gas, and petrochemical shipments as long as US attacks continue. Only four vessels crossed the strait on Sunday, down from eight on Saturday and more than 125 on a normal pre-war day, with no LNG tanker visibly recorded crossing since Thursday.
Two competing control systems have emerged: Iran threatens ships rejecting its routing instructions, while US Central Command has redirected six commercial vessels and disabled another since resuming its blockade of Iranian ports.
Iran claims two tankers exploded and were immobilized attempting the US-backed alternative route near Oman; the claim is unverified, and a separate vessel was reported burning near Oman with its crew evacuated.
Oil prices spike as alternative routes face new risk
Brent crude rose to around $91 a barrel Monday and West Texas Intermediate approached $85, with both benchmarks gaining more than 15% over the previous week. Saudi Arabia has shifted more exports through Yanbu on the Red Sea (roughly 220 miles [354 km] southwest of Hormuz by sea route) to cut Hormuz dependence.
Iran has reportedly encouraged Yemen's Houthis to prepare Red Sea shipping attacks if US strikes on Iranian power and transport infrastructure continue, threatening to extend the crisis to a second chokepoint.
Where are we?
The interim agreement from June 17 is dead, with Iran no longer observing its terms and Washington having restored sanctions and resumed its blockade.
US Secretary of State Marco Rubio says Washington remains open to talks, and Iranian Foreign Minister Abbas Araghchi has confirmed the same, but neither side shows willingness to compromise on Hormuz control, the core dispute, with Iran’s nuclear file now becoming a secondary issue.
Both governments appear to calculate that further escalation improves their negotiating position, suggesting nightly strikes and Gulf attacks continue in the near term.
There is no exit strategy in sight.
Thus even if there is a reduction in hostilities, we are in a recurring cycle of escalation and deescalation, and nowhere near the end of hostilities.
Cold War 2.0
It’s the U.S. vs China, everyone needs to pick a side
China tests gray-zone coercion on Taiwan, squeezes Japan on rare earths
Beijing is escalating pressure around Taiwan while proving it can weaponize critical mineral supply chains against Japan.
Essentially, China is building a playbook for gradual, legally ambiguous coercion rather than overt attack, one that stretches Taiwan's defenses and exposes Japan's industrial dependence on Chinese-controlled materials.
Taiwan sees a surge in gray-zone incursions
Taiwan recorded 55 sightings of Chinese government vessels around the island in June, an 83% jump from May and a 120% increase from June 2025. Chinese coast guard and research ships are increasingly operating near Taiwan's Pacific approaches, in some cases stopping and questioning commercial vessels.
Taiwanese officials believe Beijing may be testing administrative control over surrounding waters rather than preparing a direct assault.
The goal appears to be straining Taiwan's coast guard capacity and probing vital maritime supply routes.
These naval operations may carry more strategic weight than air-force sorties, since they point toward a slow-motion blockade that avoids clear military escalation.
Beijing chokes rare earth flows to Japan
China supplied Japanese customers with almost none of several essential heavy rare earths in June, including dysprosium, terbium, and yttrium. The cutoff coincides with the ongoing dispute between Beijing and Tokyo over Taiwan.
The restrictions are already hitting Japanese manufacturers reliant on these materials for high-tech and defense production.
Dysprosium and terbium are critical for magnets used in electric motors and precision-guided weapons systems.
Targeted leverage, not blanket embargo
China is showing it can hit specific industries without triggering a full trade war. That precision gives Beijing room to apply pressure while limiting the risk of broad retaliation or WTO exposure.
Exposure runs wider than Japan
The episode is a warning to the United States and Europe that critical military and technology supply chains still depend on materials processed or controlled by China. Western stockpiles and alternative processing capacity remain limited.
Latin America
The new Monroe Doctrine with a Trump Corollary
Trump's Brazil tariffs become an electoral issue
Washington's new 25% tariffs on select Brazilian goods have become a flashpoint in Brazil's October election, with President Luiz Inácio Lula da Silva and Senator Flávio Bolsonaro trading blame over who triggered the fight.
The political fight
Lula is casting himself as the defender of Brazilian sovereignty against President Donald Trump's administration, a framing that plays well domestically. Bolsonaro, whose movement keeps close ties to Trump, argues Lula's own poor diplomacy invited the tariffs in the first place.
Polling cited by Reuters suggests the standoff is helping Lula, not hurting him.
Bolsonaro's camp risks looking aligned with a foreign power squeezing Brazilian exporters.
The tariff mechanics
The US measure applies a 25% duty to selected Brazilian goods, though the article doesn't specify which sectors or the total trade value affected.
Strategic implications
Trump's trade policy is increasingly doubling as a lever of political pressure abroad. In Brazil, that lever is showing results.
Tariffs designed to weaken Lula may instead be consolidating support around him.
Bolsonaro's alignment with Washington becomes a liability rather than an asset heading into October.
New Europe
Europe's center of gravity shifts east, politics moves right, hostility to migrants from the south rises, as ties with the U.S. fray, and fear of Russia increases
Burnham replaces Starmer as UK prime minister without an election
Andy Burnham becomes Britain's new prime minister on July 20, replacing Keir Starmer after less than two years of Labour government. The handover completes Burnham's return to national politics after leaving Westminster to serve as mayor of Greater Manchester.
A sitting prime minister is stepping aside mid-term without a general election, making Burnham Britain's seventh prime minister since 2016 and testing whether a leadership change alone can revive a government that has totally lost momentum since its 2024 win.
Burnham takes office after Starmer formally tenders his resignation to King Charles III.
He inherits weak economic growth, strained public services, and declining public confidence in government.
New PM bets on regional power shift
Burnham has promised to move power and investment away from Westminster and toward Britain's cities and regions, a platform built on his experience as Greater Manchester mayor. His program includes expanded council-house construction, social care reform, greater public control over essential utilities, and a stronger role for regional government.
The scale of the shift will depend heavily on implementation, not just announcement, given how centralized UK fiscal and policy authority remains.
Fiscal rules stay, testing market confidence
Burnham has indicated he will retain the government's existing fiscal rules, an attempt to reassure financial markets that his domestic agenda won't drive uncontrolled borrowing. That commitment sets up an early tension between his regional investment promises and the constraints of sticking to Starmer-era fiscal discipline.
His choice of chancellor and the makeup of his first cabinet will be the clearest early signal of how far he breaks from the Starmer government's approach.
Foreign policy holds steady, for now
Burnham has signaled continued British support for Ukraine, suggesting no immediate shift on the war. His broader approach to relations with the United States, Europe, and the Middle East remains undefined, leaving allies without a clear read on his foreign policy priorities beyond Ukraine.
What to watch
Burnham's cabinet appointments and first budget will show whether he intends a genuine break from Starmer's approach or largely continuity with a new face. His biggest immediate test is establishing authority without an electoral mandate, while managing the gap between his regional investment promises and his commitment to existing fiscal rules.
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What happened today:
1871 - British Columbia joins Canadian Confederation. 1917 - Corfu Declaration lays the foundations for the creation of Yugoslavia. 1936 - Montreux Convention restores Türkiye’s control over the Bosphorus, the Sea of Marmara, and the Dardanelles. 1944 - German officers launch failed attempt to assassinate Adolf Hitler. 1949 - Israel and Syria sign the final armistice agreement of the 1948 Arab-Israeli War. 1951 - King Abdullah I of Jordan assassinated in Jerusalem. 1969 - Apollo 11 completes the first crewed landing on the Moon. 1974 - Turkish forces invade Cyprus. 2015 - U.S. and Cuba restore diplomatic relations after 54 years.
