JPMorgan Warns Oil Prices Could Surge 240%

JPMorgan has warned that if Russia dramatically cuts production in response to Western plans to cap the country's energy prices, oil prices could rise by 240 percent to $380 per barrel. Last week, G7 leaders announced that they were working on plans to cap the price of Russian oil in order to maintain pressure on Moscow over its invasion of Ukraine.

However, JPMorgan analysts stated in a note issued this weekend that Russia, one of the world's major energy exporters, is in a relatively strong position as a result of the recent rise in oil and natural gas prices.

According to JPMorgan, Moscow could retaliate against the G7 price cap by cutting oil production by up to 5 million barrels per day without causing significant economic harm.

However, given the supply and demand imbalance that has already driven the Brent crude price up nearly 50% this year to around $112 per barrel, such a cut would be disastrous for global oil markets.

"The most extreme scenario of a 5 million barrel per day slash in production could drive oil prices to a stratospheric $380 a barrel," JPMorgan's analysts, led by Natasha Kaneva, said in the note.