The Group of Seven (G7) countries has imposed a cap on Russian seaborne oil prices in an effort to limit Moscow's ability to finance its war in Ukraine.

The cap, which came into force today (5 December), is to be enforced by the G7, the European Union and Australia, in addition to an EU embargo on imports of Russian crude by sea, and similar pledges by the United States, Canada, Japan and Britain.

Russian oil will only be allowed to be shipped to third-party countries using G7 and EU tankers, insurance companies, and credit institutions if the cargo is bought at or below the price cap.

Russia has said it will not abide by the measure and will not sell oil that is subject to the cap, even if it has to cut production.

Exporting oil and gas to Europe has been a major source of Russian foreign currency earnings since Soviet geologists discovered oil and gas in the swamps of Siberia in the post-World War Two period.

A source who wished to remain anonymous has revealed to Reuters that a decree is being prepared to ban Russian companies and traders from interacting with countries and companies that enforce the G7's oil price cap.

This would effectively prohibit the export of oil and petroleum products to these countries and companies.