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What I would like to achieve here is the Restricted View permission level but with the option to print documents from libraries included in it.

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Per my knowledge, if you allow them to view/print the document, they will be able to download it. As you are using SharePoint Online, you if have the Azure Rights Management service (Azure RMS) from Azure Information Protection enabled, you will be able to apply Information Rights Management(IRM) to a list or library, and control the available behavior for users who download these files.

You can check it here:

Set up Information Rights Management (IRM) in SharePoint admin center

Apply Information Rights Management to a list or library

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You can do it by following the below steps,

  1. Goto your library --> library settings --> permissions --> Click on Stop Inheriting Permissions. After that library will have a unique permission.

Note – By doing this, the library will not inherit the same permissions as the site.

  1. Create one “View Only” group. Users added in this view only group will not be able to download the document or sync the document library in their system. Provide the name and the permissions level (view-only permissions) for this group.

  2. Add users into your "View Only" group, for whom you want to restrict downloading.

  3. After adding a user to View Only group, users will only be able to access the document but will not be able to download. But when they open the file in browser, then they can print it.

For information, refer the below link,

https://www.cloudfronts.com/restrict-download-and-print-option-for-sharepoint-online-document-library/

EDIT

You can set "Offline Client Availability" as No at your library level settings. Go to Library Settings --> Advanced settings --> select NO To download

But the above settings will not work for any users with contribute, edit, more permission level.

If you want to disable the download-option for your users, they should have View Only permission level. Permission levels Read and any greater include the permission for downloading a file.

View Only permission levels still includes the following permissions:

View pages, items, and documents. Any document that has a server-side file handler can be viewed in the browser but not downloaded. File types that do not have a server-side file handler (cannot be opened in the browser), such as video files, .pdf files, and .png files, can still be downloaded.

Source: Understanding permission levels in SharePoint

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