TOKYO, July 6 (Reuters) - Shares in Mitsui & Co and Mitsubishi Corp tumbled on Wednesday, reacting in part to heightened tensions between Moscow and Tokyo after former Russian president Dmitry Medvedev threatened Japan could be cut off from Russian gas and oil.

Japan's two biggest trading firms, which are both investors in the Sakhalin-2 gas and oil project, also saw their shares hit by a drop of roughly 9% in oil prices overnight on growing fears of a global recession and fresh flare-ups in China COVID-19 cases.

Medvedev's remarks came after Japanese Prime Minister Fumio Kishida said during a stump speech over the weekend that the Group of Seven (G7) "came to an agreement to make a system that will cap Russian oil prices at around half its current price."

G7 leaders last week agreed to explore imposing a ban on transporting Russian oil that has been sold above a certain price in an effort to reduce Moscow's revenues and deplete its war chest, but had not mentioned a specific figure for the cap.

If a cap of that level was implemented, Japan "would have neither oil nor gas from Russia, as well as no participation in the Sakhalin-2 LNG project," Medvedev, now deputy chairman of Russia's Security Council, wrote on social media on Tuesday.

He added oil could top $300 to $400 a barrel if such a price cap was used.

On Wednesday, Kremlin spokesman Dmitry Peskov told reporters that Japan has taken an "unfriendly" position toward Russia which does not help to develop ties in either trade and economy or the energy sector.

The comments from Kishida and Medvedev further escalate a fraught situation after Russia announced on Friday a decree that seizes full control of the Sakhalin-2 project, one of the world's largest liquefied natural gas projects, a move that could force out its Japanese trading firm investors as well as Shell.

Japan's government spokesperson Seiji Kihara said on Wednesday he was aware of Medvedev's remarks but declined to comment on them.

He also declined to confirm if there was a specific figure for a cap being considered by the G7, saying only that the "specifics of a cap and pricing level are yet to be decided and will be discussed among G7 members".

The higher level of Russian-Japan tension has heightened the risk that the Japanese trading firms will not be able to salvage their investments in Sakhalin-2, said Tilak Doshi, managing director of Singapore-based Doshi Consulting.

Shares in Mitsui, which has a 12.5% stake in the project, slid 5.5%, bringing the giant trading firm's stock losses since Thursday to 7.4%.

It declined to comment on Medvedev's comments and reiterated it was seeking to confirm and analyse the contents of the Russian decree and would be discussing developments with stakeholders.

Mitsubishi, which has a 10% stake in the project, saw its shares fall 4.9% for a 6.3% decline since Thursday.

Mitsubishi declined to comment on Medvedev's remarks. It is discussing its response to the decree with its Sakhalin-2 partners and Japan's government.

The fracas is also likely to mean Sakhalin-2 will supply less LNG than expected, exacerbating tightness in the market and forcing Russia to scale back its global LNG ambitions.

It could "mean that Russia's LNG expansion might be slower, and also it would have (to) replace markets that Shell, Mitsui and Mitsubishi would have served," Doshi said.

In 2021, Russia exported 40 billion cubic meters (bcm) of LNG, making it the world’s 4th largest LNG exporter and accounting for approximately 8% of global LNG supply.

About 60% of the LNG that Sakhalin-2 supplies under long-term contracts is shipped to Japan.

Any cutting-off of energy supplies to Japan by Russia would also naturally dent resource-poor Japan's energy security.

LNG accounts for 24% of Japan's total energy mix, with Russia accounting for 9% of its LNG imports.

(Reporting by Sakura Murakami and Yuka Obayashi; Additional reporting by Florence Tan in Singapore, Chang-Ran Kim and Sam Nussey in Tokyo; Editing by Edwina Gibbs)