Bjarne Schieldrop, an analyst at Swedish bank SEB, warned prices could be near £165 per barrel if the G7 pushes ahead with plans to cap the price of Russian crude and products. He said on Wednesday that the plans were a “recipe for disaster” and stressed prices in the oil market have more than doubled to $120 (nearly £100) a barrel this year.
The G7, including Britain, said it would explore the feasibility of capping Russian oil prices in a meeting on Tuesday.
It also said it wants to stop the country from profiting from the surge in energy prices driven by its invasion of Ukraine.
However, Schieldrop warned the plan seems “neat on paper but it sounds like a recipe for disaster right now”.
He instead suggested Russia had been handed immense power in the market due to strong demand and low supplies.
The market could face even greater pressures if Russian production was to fall by as much as two million barrels per day.
Schieldrop said in a note on Wednesday: “G7 countries are today praying that Russian oil exports will not go down.
“Because if they do, then the oil price will spike from the current $117 a barrel to above $200 a barrel.”
He added: “Ultimately, if the price cap regime is implemented and buyers try to adhere to it, then naturally Russia will say ‘pay the price or no oil’.”
“Working with industry, we are confident that this can be achieved over the course of the year, providing enough time for companies to adjust and ensuring consumers are protected.”
Business Secretary Kwasi Kwarteng added: “Unprovoked military aggression will not pay and we will continue to support the brave people of Ukraine as they stand up to tyranny, building on our existing sanctions that are already crippling Putin’s war machine.
“We have more than enough time for the market and our supply chains to adjust to these essential changes.
“Businesses should use this year to ensure a smooth transition so that consumers will not be affected.”