By Shadia Nasralla
LONDON, Oct 21 (Reuters) - Oil prices rose by more than $1 on Wednesday as attacks on Gulf shipping and no signs of diplomatic progress to end the Iran war fuelled supply disruption fears, with the Brent benchmark hovering near 5-month highs, while falling US crude and product inventories also lent support to the market.
Brent crude futures rose $1.32, or 1.2%, to $110.11 per barrel by 0747 GMT. US West Texas Intermediate (WTI) crude gained $1.18, or 1.2%, to $99.00 per barrel.
In
the previous session, Brent hit its highest in five months and WTI in six months but prices fell after Iran's president discussed mediation efforts in a meeting with Pakistan's army chief in Tehran.
"Even tentative signs of additional supply or diplomatic progress were enough to tempt traders with a bullish bias to bank some profits," PVM analysts said. "Whether this was justified is debatable, as neither of the two geopolitical conflicts underpinning the market's bullish sentiment has shown any signs of de-escalation," they added, referring to the Middle East and Russia-Ukraine wars.
Iran told Pakistan's army chief there would be no talks with Washington until its demands were met, Iranian media outlet Nournews reported on Tuesday, adding that a Qatari delegation had arrived in Tehran.
Shiptracker Kpler said at least 18 vessel attacks were recorded over the past two weeks, while LSEG analysts warned Iran was targeting tankers well beyond the Strait of Hormuz, reaching into the Gulf of Oman and jeopardising Gulf crude loadings and the ship-to-ship transfers supporting regional loadings.
Iranian Foreign Minister Abbas Araqchi said in a television interview aired on Tuesday that Iran has not received a response from Saudi Arabia or Yemen's Houthis to its offer to help broker peace talks.
The Iran-aligned Houthis on Monday claimed responsibility for attacks on a Saudi Aramco site in Yanbu, the Shaybah oilfield and Saudi Arabia's Riyadh and Abha airports.
In the US, two Energy Department officials said on Tuesday they were working with refiners around the world to boost fuel output.
According to market sources citing API data, US crude stocks fell by 4.9 million barrels in the week ended October 16, with gasoline and distillate inventories also down. Government inventories data is due at 1430 GMT. [EIA/S]
(Additional eporting by Colleen Howe in Beijing and Emily Chow in Singapore; Editing by Shri Navaratnam, Kirsten Donovan)
