Global oil prices have fallen back below $100 (£77) a barrel amid ceasefire talks between Russia and Ukraine and concerns over the rapid growth in Covid infections in China.

The price of a barrel of oil slid to $99 on energy markets on Tuesday, before rising back to just above $100 in early afternoon trading. It comes amid a decline from a 14-year high of close to $130 reached earlier this month after Vladimir Putin ordered troops into Ukraine.

Analysts said the drop was driven by hopes for a diplomatic solution in Ukraine. It came as western leaders urged big oil-producing nations including Saudi Arabia to increase supply.

Oil prices had surged close to record levels of about $146 a barrel set in 2008, fuelled by concerns over supply disruption and the impact of sanctions designed to wean western economies off Russian oil in response to the conflict.

The drop in prices also comes as coronavirus infections rise in China leading to tougher lockdown measures as part of Beijing’s “zero-Covid” strategy, which analysts said could hit demand for energy supplies from the world’s second biggest economy.

It also comes after the Russian foreign minister, Sergei Lavrov, signalled Moscow’s support for the 2014 Iran nuclear deal to resume as soon as possible, which would lead to sanctions on the country’s oil being lifted.

Economists have said global oil and gas prices remaining at levels of earlier this month would dramatically slow the pace of global economic growth and add to an already intense squeeze on households and businesses through higher inflation.

Although the oil price has now fallen back to the lowest level in two weeks, it remains at the highest level since September 2014.

“The prospect of a diplomatic solution towards Russia’s military aggression against Ukraine would help ease the world’s energy supply shock that has sent commodities soaring,” said Victoria Scholar, the head of investment at the trading platform Interactive Investor.

“Meanwhile on the demand side for oil, fears about an aggressive policy response from Beijing to China’s Covid outbreak has raised the prospect of a much weaker demand for oil from the world’s second largest economy.”