Brent was down by $4.67, or 4.1 per cent, at $108.00 a barrel at 1000 GMT, and U.S. West Texas Intermediate (WTI) crude fell $5.71, or 5.2 per cent, to $103.62 a barrel.

Both contracts have surged since Russia’s February 24 invasion of Ukraine and are up roughly 40 per cent for the year to date.

Ukrainian and Russian negotiators are set to talk again on Monday via video link. Negotiators had given their most upbeat assessments after weekend negotiations, suggesting there could be positive results within days. 

“Beside new talks between Ukraine and Russia, I guess new lockdowns in China are the reason for a negative start of the week for crude oil,” said UBS analyst Giovanni Staunovo.

China, the world’s largest crude oil importer and second largest consumer after the United States, is seeing a surge in COVID-19 cases, as the highly transmissible Omicron variant spreads to more cities, triggering outbreaks from Shanghai to Shenzhen.

Its daily new case load figures have hit two-year highs, with 1,437 new confirmed coronavirus cases reported on March 13. 

“This week, market participants are closely tracking how Russian oil exports are evolving. So far this month oil flows had not been disrupted,” Staunovo added.

Russia’s output of oil and gas condensate rose to 11.12 million barrels per day (bpd) so far in March, two sources familiar with oil production data told Reuters, despite the sanctions on Russian oil.

The United States has announced a ban on Russian oil imports and Britain said it would phase them out by the end of the year. Russia is the world’s top exporter of crude and oil products combined, shipping around seven million barrels per day or seven per cent of global supplies.

British Prime Minister Boris Johnson is trying to persuade Saudi Arabia to increase its oil output, a senior minister said, following reports that Johnson would travel to the OPEC heavyweight this week.

“Oil prices might continue moderating this week as investors have been digesting the impact of sanctions on Russia, along with parties showing signs of negotiation towards (a) ceasefire,” said Tina Teng, an analyst at CMC Markets.

Investors are also closely watching the U.S. Federal Reserve meeting this week. The Fed is expected to start raising interest rates, which would boost the dollar and put downward pressure on oil prices.

Oil prices typically move inversely to the U.S. dollar, with a stronger greenback making commodities more expensive for holders of foreign currencies.