Top Western finance officials are expected to lay out their plan for setting a cap on the price of Russian oil this week as they push to put together a workable policy before a December deadline.

Finance ministers from the Group of Seven wealthy democracies are set to meet virtually on Friday, when they are expected to release an endorsement of the price-cap plan and commit to finalizing its implementation, according to people familiar with the matter.

The expected announcement opens a new front in the West’s so far largely unsuccessful efforts to squeeze Russia’s energy revenues as the war in Ukraine shows no signs of abating. Still, officials are grappling with several complex questions about how the price cap would work.

Oil and gas remain a huge source of revenue for Russia’s war machine, making up around half of the country’s budget revenue. Western officials have been working for months to find a way to reduce those financial inflows while keeping enough Russian oil on global markets to prevent a fresh jump in already high energy prices.

Under the plan officials have been discussing this summer, the G-7 nations would bar financing and insuring Russian oil shipments unless the oil is sold below a set price. The countries make up just over 30% of the world economy, according to the International Monetary Fund, and insure over 90% of global shipping traffic, according to Bruegel, a think tank.

“Our goal here is to create a permission structure that allows Russian oil to flow but reduces their revenues,” Deputy Treasury Secretary Wally Adeyemo said in an interview Wednesday.

Among the key details still under discussion is the price at which the cap would be set. Officials are trying to find a balance between limiting Russian revenue and maintaining an incentive for Russia to sell its oil. Oil traded in New York at around $90 a barrel on Wednesday. Russian crude is already selling at a discount of more than $20 a barrel below global benchmarks, according to analysts.

The price-cap plan would also apply to petroleum products, such as fuel oil, another major Russian export, according to people familiar with the plan.

Treasury Secretary Janet Yellen

started pushing the price-cap idea this spring amid concern that a European Union plan, approved in June, to ban the import and insurance of most Russian oil could cause prices to rise rapidly. She warned that the EU plan could push inflation higher and send the global economy into recession, all while ensuring the Kremlin could make up for lower volumes of oil sales through higher prices.

European officials are doubtful the plan would have a major impact on prices. Senior U.S. Treasury officials believe markets underestimate the impact the EU ban could have on the global price of oil, with internal estimates showing the price of crude could rise to roughly $140 a barrel.

The EU’s sanctions on insurance and financial services for Russian oil are set to go into effect on Dec. 5. Under the price-cap plan, the EU insurance ban would be reversed, allowing Western companies to continue providing financial services for shipment and sales of Russian oil outside the U.S. and Europe at the set price.

Still, important differences persist within the G-7 over the proposal. Officials have differing views over how many countries outside of the G-7 need to sign on to the price cap for it to work.

U.S. Treasury Secretary Janet Yellen started pushing the idea of a price cap on Russian oil in the spring.

Photo: stefani reynolds/Agence France-Presse/Getty Images

Because G-7 countries themselves are moving to ban the import of Russian oil outright, the plan relies on the willingness of other global buyers in Africa, Asia and elsewhere to abide by the price-cap proposal. The countries, or firms in those countries, would need to agree to the price cap to accept imports of Russian oil on Western insured ships.

Yet support from outside the G-7 is uncertain. Officials and analysts see little chance of persuading China to abide by the plan. India, whose purchases of Russian oil, have soared from next to nothing before the war to as much as 1 million barrels a day, also seems unlikely to sign on.

Ahead of the EU’s insurance ban kicking in, Indian purchasers have already started working on alternative ways to buy Russian oil that don’t involve Western financing or insurance.

European officials have pushed for the G-7 to win support from other buyers of Russian oil before moving ahead with the plan, including Turkey, Egypt and South Africa. Officials in the U.S. have argued that the coalition of countries at the outset is less important because the price cap will in any case encourage other buyers to push for greater discounts from Moscow. The price cap could also raise costs for Russia to develop other methods of shipment, according to a person familiar with the U.S. thinking on the plan.

Some allies of the U.S., as well as oil financiers and traders, question whether Russia would continue to sell oil under the cap. Russia has curtailed its supply of natural gas to Europe this year, squeezing supply and raising prices. Some analysts say Russia could take a similar step with oil if the West moves forward with the price cap.

U.S. officials have said they believe that Russia will keep selling oil at lower prices, rather than risk decreasing its production and shutting wells that in some cases could be hard to reopen.

European officials say the EU is also still grappling with problems in implementing the plan.

The bloc lacks a centralized sanctions authority that the U.S. has, leaving individual member states to encourage insurance and banking companies to stay in the market and not to drop business for fear of running afoul of the rules. EU officials also say there could be tricky discussions within the bloc in agreeing to amend its insurance ban, a decision that would have to be approved by all 27 member states.

Write to Andrew Duehren at andrew.duehren@wsj.com and Laurence Norman at laurence.norman@wsj.com