• UBS expects oil will hit $125 a barrel if Russia reacts to a planned G7 oil price cap as promised.
  • Russia has said it will cut its exports if the US-led cap comes in, which would tighten crude supply.
  • “As we get further draws, you’re going to see prices going up. That simple,” Dominic Schnider told CNBC.

Crude oil could hit $125 a barrel as Russia’s response to a US-led price cap plan threatens to tighten the global market even further, a top UBS commodities strategist has said.

Moscow has said it’s prepared to cut its oil output if the G7 nations carry through with the price cap, warning the measure will end up primarily hurting those behind the plan.

Dominic Schnider, head of commodities at UBS Global Wealth Management, said that could pull another 1 million barrels a day at a time when the oil market is already facing a supply squeeze from the OPEC+ decision to slash its production targets.

“The Russians were clear: ‘If you force us to accept the price cap, we’re simply not going to deliver crude to you,” Schnider said in a Tuesday interview with CNBC,

“And so I think that kind of situation means, maybe, from a global supply perspective, there’s an additional 1 million barrels at risk here.

“As we get further draws, you’re going to see prices going up. That simple. And we’re looking at $110-$125, that’s for us our point of gravity when it comes to crude oil,” he added.

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