Russian army in 2025. Record bloodshed, “meat grinder” continues, old men assaults. Mediazona’s year end summary

Independent analysis shows 2025 is the deadliest year of the invasion to date, with over 156,000 confirmed killed since the war began and excess-mortality data implying at least 100,000 Russian military deaths in 2024 alone and a projected higher toll for 2025; recruitment is roughly 30,000 per month but is only marginally replacing losses. The report documents a tactical shift toward conserving armor and using high-attrition infantry infiltration, an aging volunteer force (most frequent ages 46–52), widespread court-ordered death declarations (≈90,000 lawsuits since mid-2024) and mass deletion of missing/dead case files across regional courts, underscoring deteriorating military capacity and reduced transparency with implications for political risk and investor assessment of Russia and related emerging-market exposures.

Analysis

Market structure: The steep rise in Russian frontline casualties and tactics conserving armor shifts demand toward munitions, electronic warfare, loitering munitions, small-arms ammunition and contractor logistics rather than tanks. Expect multi-year uplift in Western defense budgets; a 10–25% incremental procurement cycle for precision munitions and drones in EU/US suppliers over 12–36 months is plausible, tightening supply and raising pricing power for makers of rockets, mortar rounds and counter-drone systems.

Risk assessment: Tail risks include a sudden escalation (NATO direct support expansion or expanded sanctions) or a negotiated pause; both would re-price energy and defense differently. Near term (days–weeks) volatility spike risk to oil, gas, RUB and EM credit; medium term (3–12 months) widening of EM sovereign spreads and sustained outperformance in defense equities; long term (12–36 months) structural reallocation of European budgets to defense.

Trade implications: Tactical trades favor long defense equities/ETFs (ITA, XAR, LMT, NOC) and selective energy exposure to Brent/TTF via futures or ETFs (BNO, XLE) with volatility protection via short-dated put spreads. Short Russian exposure (RSX, RUB forwards) and long gold (GLD) or VIX call spreads as insurance are warranted while monitoring sanctions/litigation flows that can abruptly delist or freeze assets.

Contrarian angles: Consensus assumes Russia’s material depletion forces Western fatigue; the hidden effect is chronic demand for Western munitions and logistics services that benefits mid-cap specialized suppliers (Olin OLN for propellants, ATK suppliers) more than large platforms. If Brent falls below $70 for 30 days or NATO fails to approve major packages in 60 days, rotate back from energy into cyclicals; otherwise maintain overweight defense and ammo specialists for 12–24 months.

Key Decisions for Investors

• Establish a 2–3% portfolio long in aerospace & defense via ITA (iShares U.S. Aerospace & Defense ETF) with a 12–24 month horizon; hedge 25% of position with 6–9 month put protection if sector volatility (VIX) falls under 18.
• Add a 1–2% tactical long in energy exposure: buy Brent 3–6 month call spreads (buy $80–90, sell $100) or 1% in XLE; increase to 3% if Brent > $90 sustained for 5 trading days.
• Short 1–2% position in RSX (VanEck Russia ETF) or RUB forwards; scale in if USD/RUB > 110 or RSX rallies above pre-sanction level by 15%; cap loss at 20% of trade size via stop.
• Buy 0.5–1% portfolio protection: GLD (0.5%) plus a 3-month VIX call spread (long 1–3 month 10-point wide) sized to cover 50% of realized drawdown risk if equity markets gap down >5% intraday.
• Monitor EU/US defense budget announcements and NATO packet approvals over next 30–90 days; if combined procurement increases >10% yoy for munitions/drones, deploy additional 2–3% into small/mid-cap ammunition and drone manufacturers (e.g., consider OLN, LMT, RHM.DE) within 30 days.