Brent prices could soar to a “stratospheric” $380 a barrel in “the most extreme scenario” of Russia slashing oil production by 5 million barrels per day (bpd) in retaliation to a price cap being considered by the Group of Seven, analysts at JP Morgan said in a note dated July 1.

G7 economic powers agreed last week to explore imposing a ban on transporting Russian oil that has been sold above a certain price, aiming to limit Moscow’s ability to fund its invasion of Ukraine, which Moscow describes as a “special operation”.

“A $50-60 per barrel price cap would likely serve the G7 goals of reducing oil revenues for Russia while assuring barrels continue to flow,” the bank said.

“The most obvious and likely risk” is Russia not cooperating and retaliating by reducing exports of oil, it said, adding that Moscow can cut output by up to 5m bpd “without excessively hurting its economic interest”.

“Given the high level of stress in the oil market, a cut of 3m bpd could cause global Brent price to jump to $190/bbl, while the worst-case scenario, a 5m bpd cut could drive oil price to a stratospheric $380/bbl,” JP Morgan said.

Russian Deputy Prime Minister Alexander Novak said last week that attempts to limit the price of Russian oil could lead to imbalance in the market and push prices higher.

JP Morgan also saw alternative scenarios where China and India do not cooperate with G7 on the price cap, or where Russia fully re-routes exports from the west to the east but loses pricing power.