Brent oil slips as US weighs easing sanctions on global 'shadow fleet'

By Georgina McCartney

HOUSTON, Oct 15 (Reuters) - Brent crude prices fell around 1% on Thursday as investors eyed potential US steps to ease restrictions on the world's "shadow fleet" of tankers, which could help relieve vessel tightness and war risk premiums that have driven freight rates higher. 

The international benchmark fell $1.51, or 1.42%, to $104.55 a barrel by 9:58 a.m. EDT (1358 GMT). 

US West Texas Intermediate crude futures were up by 72 cents, or 0.76%, to $95.81 a barrel, likely driven by expectations for a large draw in weekly US inventories.

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 to move oil or oil products. The Treasury Department referred questions to the Department of Energy.

SHIP ATTACKS SUSTAIN OIL RISK PREMIUM 

Escalating conflict between Saudi Arabia and Yemen's Houthis and renewed attacks on ships in the region curbed oil's losses. 

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.

Spain will release 4.4 million barrels from strategic reserves in October, an Energy Ministry official said on Thursday, as the International Energy Agency began a meeting expected to clarify details of a 100-million-barrel oil stock release, including diesel, with the timing and scale of the move in focus.

In the US, official oil stock numbers from the US Energy Information Administration are due at 12 p.m. EDT (1600 GMT), delayed by a day following the Columbus Day holiday on Monday.

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