Oil gains over $1 on Strait of Hormuz shipping disruptions, Russia tensions

By Siddharth Cavale

NEW YORK, Nov 12 (Reuters) - Oil prices rose on Thursday by more than $1 a barrel, as continued disruptions to shipping through the Strait of Hormuz and broader geopolitical tensions offset pressure from rising crude output that had sent prices lower in early trade.

Brent futures were up $1.2 or 1.3% a barrel at $93.96 at 12:08 p.m. ET or 1508 GMT. US West Texas Intermediate crude was up 53 cents or 0.6% at $87.06.

Both benchmarks were still headed for a weekly decline.

Prices fell early, and had been trading steady to lower before President Donald Trump wrote on social media that the US did not need a deal with Iran. 

"Those days have long since passed. We’ve got their money, Hundreds of Billions of Dollars, and we’ve got their Strait!" he wrote. 

In the strait, tankers are still ablaze, oil spills are washing ashore and drones and missiles have hit infrastructure across the region. On Thursday, Iran's military said four oil tankers were hit by explosions in the Strait of Hormuz after ignoring warnings. Reuters could not immediately verify the Iranian accounts.

Attacks on shipping in the Middle East have increased in recent weeks. The Strait of Hormuz carried nearly one-fifth of the world's crude oil before the US-Israel conflict with Iran.

Elsewhere, Ukraine continued attacks on Russian energy infrastructure, saying it targeted the port area of Ust-Luga by the Baltic Sea in Russia's northwest with drone attacks which triggered a fire and damaged part of its network of fuel tanks. Ust-Luga is a major oil, oil products and grain export outlet, along with other commodities.

"The tit-for-tat exchanges between Russia and Ukraine and attacks on shipping by the IRGC are beginning to add additional price pressure," said Timothy Snyder, chief economist at Matador Economics. "It is beginning to look like investors are growing weary from hearing the same song on peace prospects."

OPEC PRODUCTION RISES

OPEC+ crude production rose in October, driven by higher Saudi Arabian output despite shipping disruptions through the strait. 

Ukraine peace talks between Russian President Vladimir Putin and US negotiators Steve Witkoff and Jared Kushner began in the Kremlin. In a potential breakthrough, a US envoy said Putin agreed to include European representatives in the next round of negotiations.

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

Washington is set to extend a waiver to a US law in coming days allowing some foreign-flagged ships to transport oil and other commodities between US ports, four industry sources said on Thursday. 

(Reporting by Siddharth Cavale in New York, Seher Dareen in London, Yuka Obayashi in Tokyo and Siyi Liu in Singapore; additional reporting by Stephanie Kelly; Editing by Thomas Derpinghaus, Alexander Smith, Louise Heavens, Nick Zieminski and David Gregorio)