• The intensity of Russian attacks decreased and territorial gains remained marginal. • Russian forces made new small cross-border incursions in the north to divert Ukrainian reserves from ongoing counterattacks in the Zaporizhya region. • Ukraine starts providing assistance to the US and Gulf states in countering Iranian drone attacks.

Russia conducted another massive drone and missile attack on Ukraine’s critical infrastructure on Mar. 7, deploying 480 drones, 16 cruise and 13 ballistic missiles. The Ukrainian air defense reported intercepting 453 drones along with 11 cruise and 8 ballistic missiles. The attack targeted energy infrastructure in Kyiv city as well as the Chernivtsi, Zaporizhya, Vinnytsia, Dnipropetrovsk, Odesa and Zhytomyr regions. Besides energy infrastructure, Russia also continued strikes against Ukrainian Railways’ infrastructure across the country, targeting traction substations and locomotives in the Zhytomyr, Khmelnytsky, Rivne, Vinnytsia, Sumy and Kharkiv regions. In related news, Naftogaz said its gas production assets in the Poltava region were under attack for two consecutive days, without specifying the extent of damage.

Ferrexpo reported that, following the temporary suspension of operations on Jan. 20 amid reduced power availability and a surge in power costs, it has now resumed production with one of its pelletizers. The company also announced that it holds $3m (out of $30m total cash currently) with Swiss bank MBaer Merchant Bank AG, which recently had its license revoked and has been ordered to liquidate.

President Volodymyr Zelensky said yesterday that Ukraine had received a request from the US for assistance in dealing with Iranian drone attacks in the Middle East region and he instructed the military “to provide the necessary means and ensure the presence of Ukrainian specialists who can guarantee the required security.” According to a source cited by Reuters, the US requested help in protecting its bases and personnel in certain Middle Eastern countries, and Ukrainians would start work there “in ⁠the next few days.” A day earlier, the Financial Times reported, citing Ukrainian industry sources, that the Pentagon and at least one Gulf government were in talks to buy Ukrainian interceptor drones. Earlier this week, Zelensky also held phone conversations with the leaders of the UAE, Qatar, Bahrain, Kuwait, and Jordan, discussing potential cooperation in countering Iranian strikes.

Ukraine’s industrial production (IP) fell by 8.1% y-o-y in January, after -2.1% y-o-y in December, with seasonally adjusted IP down 4.1% m-o-m in January following a revised +0.3% m-o-m in December, according to the government statistical office. On a related note, the government revised IP data for 2025 and 2024, trimming the 2025 rate of decline to -1.7% y-o-y from -2.4% previously and raising 2024 growth to 4.7% from 3.6%.

Ukraine exported 3.7 Mt of grains and oilseeds in February, the eighth month of the marketing year (MY) 2025/26 (July-June), down 0.3% m-o-m and 3.4% y‑o‑y. Grain exports totaled 3.4 Mt, up 1.1% m-o-m and virtually unchanged y-o-y, while oilseed exports stood at 0.3 Mt, down 14% m-o-m and 27% y-o-y.

According to the State Statistics Service, Ukraine’s final 2025 grain and oilseed harvest totaled 79.1 Mt, up 1.8% y-o-y, with average yields of 4.0t/ha (+2.8% y-o-y). Corn output reached 30.7 Mt (+14% y-o-y), yielding 7.0 t/ha (+6.2% y-o-y), while wheat production totaled 23.3 Mt (+3.3% y-o-y) at an average yield of 4.5t/ha (-1.5% y-o-y). In the oilseed segment, sunflower output declined to 10.2 Mt (-7.5% y-o-y), with yields falling 9.2% y-o-y to 2.0 t/ha.

The Cabinet of Ministers has allocated UAH 16bn ($370m) to the Regional Development Ministry for 2026 to compensate state rail monopoly Ukrainian Railways (RAILUA) for losses generated by its long-distance passenger transportation segment. The funding will be transferred to the company on a quarterly basis, subject to government audits of respective expenditures.

Ukraine’s headline current account (CA) deficit narrowed to $0.6bn in January from $1.4bn in December and $2.8bn in January 2025. The financial and capital account (FA) posted a $0.2bn deficit, reversing from a $3.5bn surplus in December and a $1.8bn surplus a year earlier. As a result, the overall balance stood at -$0.9bn, compared with +$2.1bn in December.

The average baseload day-ahead (DAHD) electricity price reached UAH 9,786/MWh (EUR 192/MWh) in February, up 17% m-o-m and 42% y-o-y. The 2M26 average stood at UAH 9,019/MWh (EUR 178/MWh), marking a 57% y-o-y increase.

The Ukrainian National Bank’s survey-based index of business activity, a PMI-type gauge, stood at 45.9 on a 0-100 scale in February, up 4.6pt m-o-m but down 1.0pt y-o-y.

Cargo transportation in Ukraine totaled 24.8 Mt in January, down 11% m-o-m and 3.6% y-o-y. Rail freight fell by 13% m-o-m and 21% y-o-y to 11.1 Mt, representing 45% of total turnover, while motorway transportation stood at 9.7 Mt, down 16% m-o-m but up 17% y-o-y. Total freight turnover (distance-adjusted) dropped by 7.8% m-o-m and 18% y-o-y. On a related note, passenger transportation turnover surged 19% m-o-m and 20% y-o-y in January.

S&P Global Ratings upgraded its long-term issuer credit rating of MHP by one notch to CCC+ from CCC after the company redeemed its $550m 2026 Eurobonds using proceeds from the new $550m 2029 issue, substantially reducing short-term refinancing risks. The agency assigned the new 2029 notes a long-term rating of CCC+. At the same time, S&P cautioned that longer-term refinancing risk remains elevated, particularly given the sizable 2029 maturities, when both the $550m and $350m notes fall due.

• Russian advances remained marginal for yet another week despite a high intensity of ground assaults, with February gains being the lowest in almost a year. • Ukrainian counterattacks in the Zaporizhya and Dnipropetrovsk regions reportedly made further progress. • However, Russian forces keep making tactical gains on the approaches to key Ukrainian-controlled cities in the Donetsk region. • Ukraine’s interceptions of Russian drones and missiles improved in February despite intensified strikes.

Below we offer our initial assessment of potential implications for Ukraine from the US and Israel’s unfolding aerial strike campaign against Iran. In broad terms, any destabilization in the Middle East, especially a prolonged one, seems more negative than positive for Ukraine in its current situation of war with Russia. The key implications are that resulting oil price growth benefits Russia and that accelerated expenditure of ammunition by the US and potentially its European allies in a protracted conflict risks depriving Ukraine of vital military aid, especially air defense missiles. Also, given the region’s geopolitical significance, heightened tensions there may overshadow the war in Ukraine and delay the ongoing US-brokered peace process. At the same time, macroeconomic implications are likely to be muted.

Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter listed on the Warsaw Stock Exchange, reported its 2Q26FY results (calendar 4Q25). Sales rose by 33% q-o-q to $1.1bn (-4.4% y-o-y), while EBITDA declined by 28% q-o-q to $103m (-13% y-o-y).