The US-based think tank said it will probably “in part prevent Russian forces from maintaining a high pace of operations” in the Bakhmut area and elsewhere in Ukraine in the near term.
“Russian forces are likely depleting their stocks of artillery ammunition and will struggle to support their current pace of operations in certain sectors of the front line in Ukraine as a result,” said the ISW in a campaign assessment issued on Saturday.
The assessment comes as Nato's secretary general, Jens Stoltenberg, said Western countries must be prepared to provide long-term support to Ukraine, as Russia shows no signs of ending its war.
He told the BBC's World at One show on Radio 4: "We need to provide support to Ukraine now, including military support, because that's the only way to convince Russia that they have to sit down and negotiate in good faith and respect Ukraine as a sovereign independent nation in Europe.
"What we do know is that what Ukraine can achieve around that table is totally dependent on the strength on the battlefield."
In its assessment, ISW said Ukrainian Main Military Intelligence Directorate (GUR) Chief Kyrylo Budanov reported on December 31 that Russian forces in Ukraine are experiencing significant issues with artillery ammunition "that will become more pronounced by March of 2023".
Mr Budanov said Russian forces had previously used 60,000 artillery shells per day, but they now only use 19,000 to 20,000 shells per day.
He also claimed Russian troops have now removed all remaining artillery ammunition from Belarusian military warehouses to support their operations in Ukraine.
ISW said: “This Ukrainian report that the Russians have already depleted ammunition stockpiles in Belarus is a further indicator that a renewed large-scale Russian offensive from Belarus in the coming months is unlikely.”
The assessment comes as Russia carried out another round of missile attacks on Ukraine, the second in three days, on Saturday.
Ukraine shot down 45 Russian drones overnight to repel the assault, which used missiles and Iranian-made drones against Kyiv and other Ukrainian cities, officials said.
Air defences destroyed 45 Shahed drones, Ukraine's air force said in a statement.
Thirteen drones were shot down at the end of 2022 and another 32 in the new year, the statement said.
Andriy Nebitov, head of Kyiv's police force, posted on Facebook a picture of wreckage of a downed drone that featured the words “Happy New Year” in Russian.
“That is everything you need to know about the terror state and its army,” he wrote.
The attacks came as Russian President Vladimir Putin's invasion of Ukraine enters its 11th month.
After a series of humiliating military defeats, Russia in October began targeting Ukraine's infrastructure, leaving millions in the cold and dark.
The leaders of Ukraine and Russia both vowed to secure victory in speeches to mark the New Year, with Volodymyr Zelenskyy speaking of gratitude and pain as Mr Putin cast the war as a near-existential fight.
“We will fight. And when we win, we will hug,” said Mr Zelenskyy, dressed in his trademark khaki outfit and standing in darkness with the Ukrainian flag fluttering behind.
Mr Putin, breaking with tradition by delivering the New Year message flanked by troops rather than the Kremlin's walls, talked sternly and combatively about 2022 as the year that “clearly separated courage and heroism from betrayal and cowardice.”
“The main thing is the fate of Russia,” Mr Putin, dressed in a dark suit and tie, said. “Defence of the fatherland is our sacred duty to our ancestors and descendants. Moral, historical righteousness is on our side.”
Moscow had expected swift victory in what it calls a “special military operation”, but Ukraine's spirited resistance and billions of dollars of western arms supplies have helped Kyiv turn the tide of the war and mount a series of stunning counteroffensives.
Ukraine has now reclaimed more than half of the territory seized by Russia during the first weeks of its invasion.
Mr Zelenskyy promised the return of lands Moscow proclaimed it had annexed in September in his address.
“It's impossible to forget. And it's impossible to forgive. But it's possible to win,” he said.
“This year has struck our hearts. We've cried out all the tears. We've shouted all the prayers,” Mr Zelenskyy said.
“We fight and will continue to fight. For the sake of the key word: 'victory'.”