Ukraine, a country with no navy, has driven Russia's Black Sea Fleet out of its home in the Crimea to Novorossiysk, the largest functioning port in the south, striking warships in the Kremlin’s last naval refuge.

Ukrainian forces hit the naval base at Novorossiysk, more than 300 km from the front line, in an overnight raid on August 12, using its domestically developed Neptune anti-ship missiles, Palianytsia drone-missiles and sea drones. President Volodymyr Zelensky called it a “unique operation”.

That a land power with no warships of its own has forced one of the world's larger navies back into a single mainland port is among the more improbable turns of the war. And Ukraine has proven itself a formidable foe for the Russian fleet since the very start of the war: a pair of Ukrainian-made Neptune missiles sent the flagship cruiser Moskva to the bottom in April 2022. The fleet has been on the back foot since, abandoning its historic Sevastopol base in occupied Crimea as drone and missile strikes made the peninsula untenable.

Kyiv said the raid damaged four warships, among them the Kalibr-armed frigates Admiral Essen and Admiral Makarov and two patrol ships, along with a radar station and oil-port infrastructure. Satellite imagery cited by open-source analysts confirmed hits on two of the frigates near their cruise-missile launchers; Russia has not acknowledged any losses. Novorossiysk lost its water supply, and the city's two biggest grain terminals shut down, which will also hurt the Kremlin in the pocket as the grain export season gets underway.

Cornered at Novorossiysk

The strike caps a month in which the drone war has shifted decisively to ports and shipping. Between July 8 and July 30, seven tankers were hit or damaged around the Caspian Pipeline Consortium's marine terminal at the port, while both sides began striking each other's commercial fleets and grain terminals in a campaign against each other's civilian economy.

The Neptune, a Ukrainian-designed anti-ship missile and one of the few long-range strike weapons in Kyiv's arsenal, has become a signature of Ukrainian resliance and innovation in the maritime conflict. On the same night, drones knocked out power to Sevastopol for a second evening running and started fires near Balaklava, according to the milblogger monitoring group Crimean Wind. “The occupying fleet and all the infrastructure supporting it will not be safe as long as Russian aggression continues,” Zelensky said.

Novorossiysk is no ordinary harbour. The Caspian Pipeline Consortium's marine terminal there carries around four-fifths of Kazakhstan's oil exports, crude pumped some 1,500 km from the Tengiz and Kashagan fields in which Chevron and ExxonMobil hold stakes. It is also one of Russia's largest grain gateways.

The August 12 raid halted the port's two biggest grain terminals, the Novorossiysk Grain Terminal, with annual capacity of 8.5mn tonnes, and the NKHP plant, at 7.1mn tonnes, according to Reuters, citing the operators. A third terminal, KSK, with 10.5mn-tonne capacity, was undamaged. Russia is the world's largest wheat exporter, and the two idled terminals alone handle up to a third of its shipments; the country sold 41mn tonnes abroad last year.

Counting the cost

For Kazakhstan the disruption is expensive. Drone attacks cut CPC loadings by more than 20% in July, forcing Astana to redirect crude through the Atyrau-Samara pipeline into Russia and towards China. The CPC route is by far the country's most important, and there is no full substitute for it, which leaves oil revenues, the backbone of the budget, exposed.

Russia has retaliated, by bombarding the Ukrainian port of Odesa on August 8-9 that accounts for half of the country’s exports by value and two thirds by volume, which has been brought to a standstill in recent days. Authorities warn that Ukraine’s grain exports this year could be halved.

But Russia’s grain exports are also being squeezed. The Russian Union of Grain Exporters has warned of a possible shortfall of 30mn-35mn tonnes, some 15% of global trade, that would be near-impossible to replace. Analysts at ProZerno reckon August exports could fall to 1.5mn tonnes, less than half the seasonal average, and FOB wheat prices could climb to $340-370 a tonne from $224. Chicago wheat futures jumped 3% on the day of the strike, and grain elevators in southern Russia are already up to 91% full.

Ukraine’s silos are reportedly already full to overflowing. Russian strikes closed the deep-water ports of Greater Odesa on July 22, and seaborne grain exports fell by roughly three-quarters in the first half of August. Logistics costs have risen about $50 a tonne, Kyiv has cut its export forecast by 12% and put farmers' losses at $3bn, and Dragon Capital reckons the blockade could shave 1-1.5% off gross domestic product this year.

Washington's red line

Kyiv insists the fleet and its shore facilities are legitimate targets for as long as Russia's invasion continues, while repeating that it wants the war to end through diplomacy. The port, though, has also become a diplomatic pressure point.

After a July 31 call, US Vice-President JD Vance asked Zelensky to stop hitting tankers linked to the CPC, and Kyiv agreed not to target the pipeline's infrastructure or non-Russian vessels unless they were under sanctions or carrying Russian cargo. The Financial Times, which first reported the exchange, said the concession was tied to Ukraine's hopes of buying Patriot interceptors before winter; Chevron's chief executive had earlier raised concerns with the White House. Kyiv says the naval-base raid fell outside that arrangement, which covers civilian shipping rather than warships.

Turkey, which brokered the 2022 Black Sea Grain Initiative that only lasted about six months, has called for a moratorium on strikes against merchant ships and restricted transits through the Dardanelles, with further talks expected around August 20. Moscow has taken the opposite tack: Security Council deputy chairman Dmitry Medvedev said Russia has the right to attack any vessel carrying cargo for its enemy.

The Black Sea has become Europe’s own Strait of Hormuz and the war's most consequential shipping chokepoint, a stretch of water where a Kazakh oil pipeline, a Russian grain harvest and a cornered fleet now share the same firing line. Whether Ankara can revive a shipping truce, or Washington can hold Kyiv to its tanker pledge, will decide how much further the damage spreads.