By Shadia Nasralla
LONDON, Sept 29 (Reuters) - Oil prices were steady on Tuesday as investors focused on lingering concern over Middle East supply disruption brought about by the US-Israeli war on Iran and signs of recovering crude exports from the region.
Brent crude futures for November fell 24 cents, or 0.23%, to $105.04 a barrel at 1022 GMT. Meanwhile, US West Texas Intermediate crude was at $92.24, down 36 cents, or 0.36%.
Brent and WTI are headed for monthly gains of around 16% and 8%, respectively.
"A clearer picture is emerging of higher oil export volumes leaving the Gulf, but much of that increase still relies on workarounds such as ship-to-ship transfers. Those methods are less efficient and more costly than normal operations, which is why crude prices remain elevated," said KCM Trade chief analyst Tim Waterer.
Crude exports from major Middle Eastern producers climbed to 12.8 million barrels a day in September, the highest since February, preliminary figures from data provider Kpler showed on Monday, helped by increased shipments from Saudi Arabia and the United Arab Emirates.
US and Iranian officials spoke separately with mediators in a renewed effort to end seven months of war, officials of both countries said.
But US President Donald Trump said he has offered Iran nothing to end the war, rejecting media reports that cited US officials saying he was willing to ease sanctions and release frozen funds for "concrete" steps regarding Iran's nuclear programme.
Meanwhile, the US is considering regulatory relief to allow broader sales of red-dyed diesel to help lower prices, people familiar with discussions told Reuters. The proposal emerged as a leading alternative to a diesel export ban.
"The flashes (of a possible rapprochement between the US and Iran) across media are wishful thinking rather than concrete deals," said PVM analyst John Evans. "If it were not so, why is the US president still pondering a diesel/export ban and twiddling with the tax regime on agricultural ‘red’ diesel if he thought petroleum products would be soon flowing forth from the choke points of disruption he has caused via Hormuz and Bab el-Mandeb?"
US crude oil and gasoline inventories were expected to have fallen last week, while distillate stockpiles were likely unchanged, a preliminary Reuters poll showed on Monday.
(Additional reporting by Enes Tunagur in London, Sumit Saha in Bengaluru and Trixie Yap in Singapore; Editing by Thomas Derpinghaus, Jacqueline Wong and Louise Heavens)
