A Russian construction worker speaks on a mobile phone during a ceremony marking the start of Nord Stream pipeline construction in Portovaya Bay. File / AP

The G7 said it was working towards a "broad coalition" of support for the measure but officials in France urged caution, saying a final decision could only be taken once all 27 members of the European Union (EU) had given their assent.

Households on the continent have borne the brunt of rising energy prices, with governments under pressure to alleviate the pain of the resulting high inflation.

"Russia is benefitting economically from the uncertainty on energy markets caused by the war and is making big profits from the export of oil and we want to counter that decisively," German Finance Minister Christian Lindner said in a press conference after the move was announced.

The aim of the price cap on oil exports was to "stop an important source of financing for the war of aggression and contain the rise in global energy prices," he added.

Ahead of Friday's decision, Kremlin spokesman Dmitry Peskov sounded a clear warning. The adoption of a price cap "will lead to a significant destabilisation of the oil markets," and force American and European consumers to pay the price, he said.

And Russia's Deputy Prime Minister Alexander Novak had warned on Thursday that Moscow would "simply not supply oil and petroleum products to companies or states that impose restrictions," according to Russian news agencies.

 'Powerful tool'

At a summit in June, the G7 leaders agreed to work towards implementing the ceiling on crude sales. In their statement, finance ministers from the G7 said they would "urgently work on the finalisation and implementation" of the long-considered measure, without specifying the cap level.

The price cap was "one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States," US Treasury Secretary Janet Yellen said in a statement on Friday.

She said the measure already was beginning to influence prices, with countries that have not yet committed to join the cap able to negotiate lower prices from Russia.

"We're already seeing this initiative pay off because countries that are buying Russian oil are signing deals with Russia to sell oil at greatly discounted prices," Yellen said on MSNBC.

She said the capped price "will be set at a level that will continue to make it profitable for Russia to produce," rather than follow through on Moscow's threat to shut-in their oil and keep it off world markets.

The G7 move would block Russia from getting any kind of service, including maritime insurance, on its petroleum shipments unless the product is sold at or below the cap, she explained.

And Yellen noted that G7 countries provide the vast majority of such services, including maritime insurance, 90 per cent of which come from Britain and the EU.

A senior US Treasury official told reporters that the cap would include three prices, one for crude oil and two for refined petroleum products.

The French finance ministry said technical work on the price cap was still in progress. "It is clear that no final decision can be taken until we have consulted and obtained unanimous support from all 27 member states of the European Union," it said.

Agence France-Presse