Russian forces face “imminent defeat” to advancing Ukrainian soldiers in a key supply hub in eastern Ukraine, threatening Russian positions elsewhere and potentially undermining morale further, observers said Thursday.

Russian military bloggers said Ukrainian troops advanced west, north and northeast of the Donetsk region town of Lyman on Wednesday. Russian troops captured Lyman, which had a pre-war population of 20,000, in the third month of the invasion in May.

“From a staging point on the right bank of the Oskil River, the Ukrainian command continues the offensive aimed at reaching Svatove and encircling Lyman,” said Rybar, a pro-war Telegram channel that shares daily reports to 800,000 of its followers, in an English-language update.

A key railway juncture, Lyman could be used as a gateway for Ukrainian forces’ counteroffensive to continue advancing further east without losing momentum before winter.

“The collapse of the Lyman pocket will likely be highly consequential to the Russian grouping in northern Donetsk and western Luhansk,” the Institute for the Study of War (ISW) said in a daily update.

The Russian Defense Ministry’s failure to address these losses “will likely further reduce already-low Russian morale,” it added.

In a daily briefing Wednesday, the Defense Ministry’s spokesman claimed that Ukraine’s offensive on Lyman had failed and that 70 Ukrainian soldiers were killed.

Rybar, however, noted that the Ukrainian forces’ manpower “allows the enemy to suffer heavy losses without reducing the onslaught” on Russian and pro-Russian positions.

Lyman’s capture would also likely complicate Russia’s imminent annexation of Donetsk and Luhansk in the east, as well as Zaporizhzhia and Kherson in the south, following referendums that Kyiv and its Western allies denounce as a sham.

The Kremlin said this week that the goal of the Russian offensive in Ukraine was to “at least” capture eastern Ukraine.