Oil prices soared as soon as Russia invaded Ukraine in what it euphemistically called a "special military operation" aimed at "demilitarizing" its eastern neighbor. As the conflict escalated and the West began implementing sanctions on Moscow, fears grew over potential action against Russia's oil industry, which supplies around 7 percent of the world's crude and is the biggest exporter of crude oil and oil products taken together.

Talks about oil sanctions marked the start of the week, and the market response was a sharper rise in oil prices. So far, nothing surprising. According to data about hedge fund buying activity in oil contracts, however, there are fears of a global economic slowdown, and while also unsurprising, this is most unwelcome.

In his weekly column on hedge funds and oil buying, Reuters' John Kemp said the industry remained very bullish on oil, with the ratio to bearish positions at 7:1. This ratio signals that hedge funds are following recent geopolitical events in Europe closely, but they will be watching for demand destruction as oil prices remain elevated.

As oil prices rise, eventually, they tend to reach a certain point when demand destruction begins either through fuel conservation, as Reuters' Kemp noted in his column, or simply because expensive fuels make everything else more expensive and discourage spending.