Brent steady as US weighs easing sanctions on global 'shadow fleet'

By Georgina McCartney

HOUSTON, Oct 15 (Reuters) -  Brent crude was little changed on Thursday as investors weighed possible US steps to ease restrictions on the world’s "shadow fleet" of tankers, while conflict in the Middle East kept a geopolitical risk premium in the market.

The international benchmark was up 2 cents, or 0.02%, at $106.08 at 12:14 p.m. EDT (1614GMT)

US West Texas Intermediate crude futures were up $2.96, or 3.11%, to $98.05 a barrel, after a large US crude stock draw helped support prices. 

The shadow fleet discussions are happening days after President Donald Trump temporarily lifted sanctions on Russian diesel fuel to ease a surge in prices globally. The new talks centre on Washington potentially allowing "legal oil" to flow on previously sanctioned vessels, a US official said.

The Department of Energy said any move to relieve sanctions on the shadow fleet would not help Russia move oil or oil products. The Treasury Department referred questions to the Department of Energy.

Meanwhile, US crude stocks and distillate inventories fell while gasoline inventories rose last week, the Energy Information Administration said on Thursday. [EIA/S]

Crude inventories fell by 8.6 million barrels to 415.6 million barrels in the week ended October 9, the EIA said, compared with analysts' expectations in a Reuters poll for a 288,000-barrel draw.

SHIP ATTACKS SUSTAIN OIL RISK PREMIUM 

Escalating conflict between Saudi Arabia and Yemen's Houthis and renewed attacks on ships in the region supported prices.

A container ship and a dry bulk carrier both sank near the Strait of Hormuz after being hit by projectiles in separate incidents, maritime officials said on Wednesday.

Attacks around the waterway have surged over the past 10 days, with Iran saying it was stepping up strikes in response to the US blockade of its ports and tougher sanctions introduced last month.

"The ongoing conflict between Saudi Arabia and the Houthis is keeping a geopolitical premium in oil markets, but energy infrastructure has not been attacked in the last several days," MUFG analysts said in a note. 

Meanwhile, Ukraine resumed its attacks on Russian refineries with a strike on a plant in the Ryazan region, after Ukrainian President Volodymyr Zelenskiy voiced anger at a "dangerous" withdrawal of US intelligence.

The International Energy Agency  agreed on Thursday to release over 20 million barrels of diesel to the market as soon as possible and any oil remaining from a record emergency reserves release pledged in March to boost supply and cool soaring prices.

In March, countries had pledged to release more than 400 million barrels of crude and oil products as prices soared.

Spain will release 4.4 million barrels from strategic reserves in October, an Energy Ministry official said on Thursday. 

(Aditional reporting by Georgina McCartney in Houston, Ahmad Ghaddar in London, Sam Li and Trixie Yap; Editing by Joe Bavier, Susan Fenton, Xevi Fontdegloria and Sanjeev Miglani)