• Russian and Ukrainian forces have been battling for control over the eastern Donetsk city of Bakhmut for months, reducing much of the site to ruins.
• Russia, for whom capturing the city is a strategic goal and a way to cut Ukrainian supply lines in Donetsk, recently claimed that its forces have almost entirely encircled Bakhmut.
• A Russian special forces commander said Wednesday that Russian troops now occupy several streets.

Ukraine could soon face a tough decision over tactically withdrawing from Bakhmut in the eastern Donetsk region, as the fate of the city hangs in balance.

Bakhmut has been intensely fought over by Russian and Ukrainian forces for months, with Moscow viewing its capture as a strategic goal and a way to cut Ukrainian supply lines in Donetsk. Russian officials recently claimed that Moscow's forces have almost entirely encircled Bakhmut. On Wednesday, one special forces commander said Russian troops now occupied several streets in the city.

Ukraine disputes how far Russia has advanced into Bakhmut, although it concedes – in line with Western defense analysts – that Russian forces are edging in on the city, after making small but incremental advances in the surrounding area.

Still, Kyiv is vowing to fight on for now, with Ukraine's President Zelenskyy stating last week that "nobody will give away Bakhmut. We will fight for as long as we can. We consider Bakhmut our fortress."

Russia is meanwhile throwing all the manpower and artillery it can muster at Bakhmut, as it looks to present a victory to the Russian public ahead of the first anniversary of the Moscow-styled "special military operation" on Feb. 24.

"The Russians are desperate to advance ahead of the one year anniversary of this aggression. They are really using everything they have in and around Bakhmut," Yuriy Sak, an advisor to Ukraine's defense ministry, told CNBC Wednesday.

"We take it seriously, we understand that the enemy is not going to stop," he noted, adding that "the Russians are hoping that [they] will break through our defense lines, and that they will move further [into Donetsk]."

Sak said Russian forces were taking "staggering losses" in the process, as they deploy newly mobilized and inexperienced soldiers — many of whom were called up in the partial mobilization announced by Russian President Vladimir Putin last September — into the fighting around Bakhmut.

"They don't have time to even prepare the newly mobilized soldiers. So they're throwing them [in] as cannon fodder and there are so many images of fields around Bakhmut littered by the corpses of Russians," he noted.

Ukraine acknowledges the scale of the fight in Bakhmut, and this week sent the commander of Ukraine's ground forces, Colonel-General Oleksandr Syrskyi, to take charge of local military operations.

While Ukraine has previously deemed withdrawing from a settlement as a rational strategy in the wider war, it is not yet ready to give up Bakhmut, Sak said. "This is not something that has been discussed. For now, the defense of Bakhmut continues."

"The next couple of weeks will really be decisive, that's one thing we can say with certainty," he added.

How long to hold on?

Bakhmut's strategic value to Russia is disputed, but analysts say that Moscow sees its capture as a way of cutting Ukrainian supply lines in the east, and as gateway to advancing toward the nearby larger cities of Kramatorsk and Sloviansk.

Bakhmut was once a busy industrial hub with a thriving salt-mining industry, which encompassed the nearby small town of Soledar that was fully seized by Russian forces in January. It is largely uninhabitable now, its former population of around 73,000 reduced to just a few thousand residents living without power and heating.

In December, President Zelenskyy said the city had been turned into "burnt ruins" after months of intense fighting.

Ukraine's former Defence Minister Andriy Zagorodnyuk told CNBC that defending every village, town and city in Ukraine was vitally important but that sometimes strategic, unemotional decisions had to been made with regards to whether to keep on fighting in some places, as had been the case with Soledar.

"Certainly, at some point of time, there might be a question whether, in Bakhmut, it's worth keeping the troops there," he said. Zagorodnyuk said that Ukraine's forces in Bakhmut were high skilled and could avoid encirclement, but stressed that Ukraine wanted to preserve its military personnel.

"Russians also accept any losses at the moment, their tolerance for losses is unlimited so they don't care how many people they lose. At all," Zagorodnyuk, the current chair of the Kyiv-based Centre for Defense Strategies think tank, said Wednesday.

"For us, it's a totally different situation. We do care how many people will lose, because it's our people ... So essentially, at some point of time, there will be the question [over whether to pull out of Bakhmut]," he said, noting that point had not yet been reached.

If Ukraine lost Bakhmut, it would not be "the end of the world," he observed. "It's not like losing Bakhmut means the whole Donbas [eastern region of Ukraine] goes, we definitely cannot say that."

"It is a historical city, which means it is on the crossroads of the key roads there. So yes, its geographic position is important. And that's one of the key reasons why it was decided that it needs to be kept longer. But it's not like we should be accepting any losses to keep it, absolutely not."

Russia quietly confident

In the meantime, Russia is quietly confident it can capture Bakhmut, as it looks to present some tangible "success" one year on from its invasion of Ukraine — an action that has largely isolated Moscow on the global stage and deeply destabilized its economy.

Russia's Defense Minister Sergei Shoigu said on Tuesday that military operations were progressing "successfully" around Vuhledar and Bakhmut — which Russia calls 'Artemovsk.' On Wednesday, Russian media reported comments from a Russian special forces commander, who claimed Russian units were advancing into Bakhmut.

"Combat operations to block Artemovsk [Bakhmut] are being carried out successfully. Significant progress has been made on the right side of the city. Several large streets are occupied," Apty Alaudinov, Akhmat special forces commander, said on Telegram, in comments translated via Google and reported by news agency Tass. 

Many analysts have likened the "battle of Bakhmut" to the bloody and muddy attritional warfare of World War 1, as Russia tries to slowly but surely wear down Ukraine's troops — a tactic that has arguably had some success, according to Jamie Shea, a former NATO official and international defense and security expert at think tank Chatham House.

"Russia has learned during the war that the best tactic is this slow, heavy casualty [conflict] ...that tries to grind the Ukrainians down village by village, which is what we see now in the Donbas," he told CNBC Tuesday.

"They pay a price for it — they lose a lot of men, probably equipment as well. But at the end of the day, they got Soledar and they seem quite close to capturing Bakhmut, maybe surrounding the Ukrainians who are defending Bakhmut. And, to be frank, and it's not nice to say, they're killing also a lot of Ukrainian soldiers."

Shea said that the balance of forces was obviously tipped in Russia's favor, noting that "the Ukrainians can less afford to lose troops than Russia. Russia is sacrificing conscripts in all this, whereas Ukraine has its best troops in the Donbas, their battle-hardened troops."

Ukraine has denied its soldiers are in danger of being imminently surrounded in Bakhmut. On Thursday morning, the General Staff of Ukraine's armed forces said in an update that Russian troops were "trying to take full control of Donetsk and Luhansk," but that the Ukrainian contingent had repelled attacks on Bakhmut and nearby settlements.