The decline in oil prices from record highs is partly due to China's Covid resurgence.

• In the past week or so, the Russia-Ukraine war, which has been ongoing for three weeks, has led to fluctuations in oil prices.
• In the beginning of this week, crude prices experienced a significant drop, falling more than 27% below recent highs to less than $100 a barrel.
• The Chinese government has taken measures to control the surge in Covid-19 cases, which is the worst since 2020, by imposing lockdowns and temporarily halting production in certain cities.
• Russia's Foreign Minister Sergei Labrov's statement that Moscow would allow the Iran nuclear deal to proceed likely influenced markets, as it would enable the resumption of oil supply into the market.

The recent Covid wave and lockdowns in China have contributed to a decrease in oil prices from their record highs, as per analysts.

Richard Gorry, managing director of JBC Energy Asia, stated that the re-emergence of Covid in China is creating another obstacle in assessing the demand.

The Russia-Ukraine war continues to disrupt oil supply, causing markets to grapple with its effects.

Recently, oil prices have fluctuated wildly, reaching unprecedented highs of $130 per barrel before falling drastically to below $100 a barrel.

"Gorry stated that the OPEC has not altered their demand forecast in their monthly reports, indicating that things are proceeding as usual. However, he believes that this may change in the near future, as seen in China's current 45 million people under lockdown, which has a historical impact on oil demand."

Since the pandemic began, China has experienced its worst Covid spike in recent days, prompting the government to impose lockdowns and halt manufacturing in certain cities. In Shenzhen, a manufacturing hub, businesses were instructed to halt production, impacting companies such as Apple supplier Foxconn.

The reduction in demand for oil would affect energy prices globally, as China is the largest importer of oil in the world.

According to Ray Attrill, head of foreign exchange strategy at National Australia Bank, it's more likely a combination of reasons for the fall-back in oil, rather than just optimism towards an early cessation of hostilities in Ukraine.

The decline in oil prices is likely due to a combination of speculative bubbles being burst and concerns about weaker demand from China, as more cities are put under lockdown due to rising Covid cases, although these cases are small compared to other parts of the world.

The highly transmissible omicron variant has caused more than 15,000 infections in recent outbreaks, as stated by China's National Health Commission on Tuesday, according to state media.

Moscow will allow the Iran nuclear deal to proceed, resulting in the resumption of oil supply, as indicated by Russia's Foreign Minister Sergei Lavrov. Reuters reports that talks to revive the deal were previously halted due to demands made by Russia, one of the key participants in the agreement.

ANZ Research analysts Brian Martin and Daniel Hynes stated that there is optimism that a nuclear deal with Iran may be reached soon, potentially bringing stability to the Middle East and securing oil supplies.

Bob McNally, president at Rapidan Energy Group, however was less optimistic.

On Wednesday, CNBC's "Street Signs Asia" reported that the Shenzhen lockdowns, Lavrov's statement about Russia's ability to live with the Iran nuclear deal, and discussions of a potential deal between Ukraine and Russia led the speaker to understand the reasoning behind taking all the risks, but he believes the situation is not yet resolved.

He stated that we may need to increase oil prices before we can lower them significantly.

— CNBC's Evelyn Cheng contributed to this report.