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Ukrainian forces reportedly conducted counteroffensive operations in six sectors of the front on July 2 and made gains in some of these areas. The Russian Ministry of Defense and other Russian sources claimed that Ukrainian forces conducted offensive operations in the Lyman direction, in the Bakhmut area, along the Avdiivka-Donetsk City front, in western Donetsk Oblast, on the administrative border between Zaporizhia and Donetsk oblasts, and in western Zaporizhia Oblast. Ukrainian Eastern Group of Forces Spokesperson Colonel Serhiy Cherevaty reported on July 2 that Ukrainian forces are continuing to make unspecified advances on the flanks around Bakhmut. A Russian milblogger claimed that Ukrainian forces made unspecified gains southwest of Klishchiivka (7km southwest of Bakhmut). Geolocated footage published on July 1 indicates that Ukrainian forces advanced northeast of Volodymyrivka (12km southeast of Vuhledar) in western Donetsk Oblast. Russian sources claimed that Ukrainian forces continued counteroffensive operations south and southwest of Orikhiv in western Zaporizhia Oblast. Zaporizhia Oblast occupation deputy Vladimir Rogov claimed that Ukrainian forces advanced towards Russian trench positions near Robotyne (12km south of Orikhiv) and that there is ongoing close combat in these trenches. Some Russian sources continue to describe these Ukrainian counteroffensive operations as smaller tactical operations than earlier Ukrainian counteroffensive operations.

The Islamic Revolutionary Guard Corps Quds Force (IRGC QF) and Lebanese Hezbollah (LH) established a headquarters in eastern Syria, probably to coordinate arms transfers, intelligence collection, and training for Iranian-backed militants in Syria.

The Syrian Arab Army (SAA) and Russian forces conducted air strikes on rebel groups in Idlib Province shortly after the failure of the latest normalization and Astana Talks, and Iran may send Iranian-backed militants to in northwestern Syria to support the pro-regime operations.

Iran's worsening water crisis is increasing food insecurity and internal migration, which will likely fuel greater popular unrest in the coming years.

Iraq and Syria. ISIS has coerced greater support from the population and expanded attack zones along the Euphrates River, which will allow it to rebuild some capabilities over time. Iranian- and regime-backed activity inadvertently helps ISIS rebuild by undermining Syrian Democratic Forces (SDF) control. ISIS and Iranian- and regime-backed forces will be able to exploit the degradation of SDF control along the Euphrates to strengthen their capabilities.

Somalia. Al Shabaab is increasing the rate and severity of its attacks in northeastern Kenya and against Ethiopian forces in Somalia, likely to boost recruitment and local support in Ethiopia, Kenya, and Somalia. Al Shabaab may also intend to undermine the ability of Ethiopia and Kenya to effectively participate in an offensive against the group in southern Somalia.

Pakistan. The political crisis in Pakistan is exacerbating divisions within the Pakistani military. The Pakistani military fired three senior army commanders and disciplined 15 officers on June 26 over their actions during widespread protests in May. Divisions in the Pakistani military could weaken Pakistan's counter–Tehrik-e-Taliban Pakistan (TTP) operations as the TTP seeks to expand into new parts of the country.

Afghanistan. TTP is using support zones in Afghanistan to support attacks inside Pakistan. The Taliban government is unlikely to change its policies toward harboring foreign fighters in Afghanistan. The Taliban’s continuing failure to prevent the TTP from using Afghanistan to support its campaign against the Pakistani state will strain the relationship between the Taliban government and Pakistan.

The Ukrainian General Staff stated that Ukrainian forces seized the "strategic initiative" in the Bakhmut direction and are currently conducting a broad offensive in the area. Ukrainian Deputy Defense Minister Hanna Malyar similarly stated that Ukrainian forces seized the "operational initiative" in the area and reported that Ukrainian forces advanced 1,200m in the direction of Klishchiivka (7km southwest of Bakhmut) and 1,500m in the direction of Kurdyumivka (13km southwest of Bakhmut). Ukrainian Commander in Chief General Valeriy Zaluzhnyi also stated that Ukrainian forces have the "strategic initiative" in a phone conversation with Chairman of the US Joint Chiefs of Staff General Mark Milley on June 29.ISW previously assessed that Ukrainian forces had gained the initiative at every level of war across almost the entire front following the Russian capture of Bakhmut on May 21. Ukrainian officials are likely now acknowledging that Ukrainian forces possess the initiative in order to signal that Ukrainian forces intend to leverage it to a greater degree.