A strategic occupied city in eastern Ukraine is on the brink of being retaken by Ukrainian troops, reports say.
News of the advance in Lyman comes on the day Putin declared the annexation of the Donetsk region.
If Putin loses newly-declared "Russian" territory, it'll be a major humiliation, one expert told Insider.
Ukrainian forces have almost completely encircled a key city and could retake it, just as President Vladimir Putin has declared the region part of the Russian motherland, according to multiple reports.
The strategic eastern city of Lyman, in the Donetsk region, was almost completely surrounded as of around 1.30 p.m. local time Friday, Ser hiy Cherevaty, spokesperson for Ukraine's army in the east, told Ukrainian news outlet Hromadske. Almost all logistical routes are under Ukrainian control, he said.
That assessment was echoed by the Institute for the Study of War, which said that as of early Friday, local time, the Ukrainians had cut off Russian forces in the city and the surrounding area from critical ground lines of communication.
The ISW said that it is "highly unlikely" that any new Russian forces would be able to bolster the troops already there.
Lyman was overrun by Russian forces in late May, as The Guardian reported at the time. It's a crucial city for Putin's planned advance in the Donbas, which comprises the regions of Donetsk and Luhansk. Lyman serves as a logistics and supply hub for Putin's operations in the region, according to Reuters.
The military developments come as Putin declared both regions Russian territory, based on referendums widely dismissed as a sham.
Such a reversal on territory he has just declared Russian would make him "look stupid," said security and defense expert Prof. Michael Clarke of the University of Exeter.
The loss would play badly with Putin's own hawkish critics, such as Igor Girkin, the former commander who now runs a far-right military blog, he said.
"They'll say: 'Well look, you've declared these to be Russian territory, so now you're now losing bits of Mother Russia,'" Clarke told Insider.
One of Putin's puppets in the region confirmed the presence of Ukrainian troops around the city in a somewhat crestfallen statement on Telegram at around noon local time.
Dennis Pushilin served as leader of the Donetsk People's Republic, the region's breakaway separatist state not recognized by most of the West or Ukraine. He wrote that the Ukrainian army "is trying with all its might to somehow overshadow this historical event for us.
"At the moment, Krasny Liman is in a semicircle," he added, using a Russian term for the city.
Michael Kofman, a Russia expert at CNA, wrote in a tweet: "Russia's annexation announcement stands in sharp contrast to the military reality on the ground, as Russian forces face envelopment at Lyman."
The potential recapture of Lyman puts a major brake on Putin's ability to advance, or even hold, much of the Donbas, Clarke told Insider.
Lyman was to serve as the jumping-off point for Putin's plan to take two other cities, Slovyansk and Kramatorsk, which would have sealed his control of the Donbas region, Clarke told Insider.
But Lyman's likely loss puts that plan "out of the window," he said. "It just can't be done this side of the winter."
A second reason Lyman's recapture would be such a strategic blow is that it opens up a strategic path to completely cutting off Russia's north-to-south supply routes, Clarke said.