On Wednesday, Zero Hedge reported the following:

As discussed yesterday in “Buyers Balk At Russian Oil Purchases Despite Record Discounts, Sanction Carve Outs” the bevy of Russian sanctions have had the unintended consequence of also freezing Russian oil exports – despite explicit carve outs in terms set by Western nations – as buyers balk and boycott Russian crude sales amid fears that the country’s energy supplies may eventually fall under a sanctions regime anyway, leaving buyers stuck with millions in barrels they can’t then sell to downstream clients.

Today was a clear example of just that: citing traders with knowledge of tenders, Bloomberg reported that Surgutneftegaz (better known as Surgut) failed to award two tenders with combined volume of 880k tons of Urals for March loading.

…In short, there is a sense across the petroleum supply chain that sanctions aren’t done yet or aren’t well-enough understood yet. That’s why things are getting blocked. 

Meanwhile, Energy Aspects estimates that 70% of Russia’s crude trade is frozen but that will drop to 20% when there’s greater visibility on sanctions.

While that’s a reasonable proposition but there is an x-factor: could the final sanctions package actually be even more punitive for the country’s exports? Even if 20% were to end up frozen, that would still be a very bullish final scenario for the oil market; as a reminder, Goldman recently noted that even assuming full Russian output, the market remains undersupplied and continued disruptions will push oil much higher.

So what does the market think? Well, the 10x increase in Brent $200 June calls in the past week should give you a sense of what may be coming.

This is one of those articles I am sharing without having a really good idea of what it says or what it means. However, it seems as if this is information worth noting as the price of oil and gasoline continue their upward climb.