A month after the deadly Russian invasion of Ukraine threw the world into deep turmoil, some signs emerged over the weekend that the conflict may be headed towards a narrower, more localized scope. Defense analysts point out that the Russian army has been unable to meet its strategic aims (for instance, capturing the Ukrainian capital and overthrowing its government, resulting in a surrender). The explanations are several: poor military planning by Russia, their low troop morale, force coordination and logistical issues, as well as fierce local resistance despite numbing levels of death and destruction.

Instead of targeting all of Ukraine, Russian military will now reportedly fight in Eastern Ukraine, especially in the separatist region of ‘Donbas,’ where the two armies have been engaged in low-intensity war since Russia’s annexation of Crimea region in 2014. This shift is being interpreted in the West as first clear signal that Russia now realizes the difficulty in capturing most of Ukraine. Hence, it is shifting focus to territorial conquest of Donbas, which it can sell as victory at home and use as leverage in future negotiations.

That may or may not be Russia’s ‘off ramp,’ which the diplomatic community has been desperately looking signs for over the past few weeks, but it is significant nonetheless. By leaving the Ukrainian capital and central government in relative peace, Russia may be signaling that it is ready for a negotiated settlement with the elected government in Kyiv. However, it is unclear what more concessions (apart from the major pledge not to join NATO) can Ukrainian President Volodymyr Zelensky really offer Russian President Vladimir Putin, who is being accused of war crimes in the West, the next global pariah.

There is now a higher likelihood that the war may carry on narrowly inside Ukraine (and not expand outside towards NATO countries), with circumscribed strategic and territorial aims on the part of the Russians. If Russia is forced to wage a ‘limited war’ in Eastern Ukraine in deed, it might provide the Ukrainian people with the much-needed breathing space after weeks of intense bombardments. The Ukrainian authorities may also find it easier to channel foreign humanitarian aid to undertake disaster relief and recovery operations. It’s unclear how long it will take for peace to return to Ukraine

Today, the markets will be grappling with the question: how will a limited Russian offensive in Eastern Ukraine (over a potentially protracted period of time) affect international prices of hydrocarbons, grain commodities, edible oils, and industrial metals that both those countries ship to the world? Amid wild swings during this war’s first month, the price of crude oil (Brent) has surged 24 percent to $120 per barrel, wheat has climbed 33 percent to $381 per ton, corn went up 10 percent to $7.54 per bushel, nickel has surged 49 percent to $37,200 per ton, and rapeseed prices grew 31 percent to $970 per ton.

Considering that the likelihood of a direct Russia-NATO confrontation becomes lower if Russia is, in fact, compelled to scale back its war in Ukraine, it may provide some stability to commodity prices in the range where they are. But considering the possibility of continued military engagements in and around seaports in Southern Ukraine, shipments originating from the Black Sea (as well as Sea of Azov) will be under continued threat, leading to tighter global tradable surplus of key commodities exported by both nations.

Also note that Russia is subject to a growing scale of financial, investment and trade sanctions from the West. Increasingly hampered are Russian exports, and, in turn, global trading surplus of major commodities. Already, to meet their domestic demand amid rising prices, both Russia and Ukraine have reportedly instituted restrictive export-license regimes after the war broke out. While Russia may be able to somewhat neutralize the sanctions’ impact by exporting indirectly from third countries (e.g. China), the frictions in global trade looks set to grow. Let’s see how things shape up from here onwards.