By Arathy Somasekhar
HOUSTON, Oct 16 (Reuters) - Oil prices gained more than 3% and were heading for weekly gains on continued uncertainty over Middle East supplies, and as investors kept assessing how much diesel Russia could supply to the global markets.
Brent crude futures were up $3.41, or 3.2%, at $109.34 at 12:41 p.m. ET (1641 GMT), while US West Texas Intermediate crude futures rose $2.74, or 2.8%, to $100.67, crossing $100 for the first time since September 21.
So far this week, Brent has risen
4.1% and WTI 8.6%.
"Conflict in the Middle East still keeps coming back and I think it's questionable how much diesel fuel Russia can actually deliver to the markets. Those two factors are just continuing to have traders be buyers," said Dennis Kissler, senior vice president of trading at BOK Financial.
Supply concerns also increased as attacks around the Strait of Hormuz 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.
Yemen's Houthis also fired missiles at the presidential palace complex in the southern city of Aden on Thursday, killing five people.
"Intensified Iranian attacks drove Gulf crude flows sharply lower," Kpler analysts said in a report on Thursday, adding that they expected a slower and more uneven recovery in Hormuz flows in the absence of a comprehensive political deal.
Meanwhile, Ukraine struck a Russian oil refinery on Thursday after President Volodymyr Zelenskiy declared that Kyiv was abandoning a ceasefire covering energy sites announced by US President Donald Trump and criticised Trump's willingness to strike deals with Moscow.
Russia's Ryazan oil refinery has suspended operations at a primary crude distillation unit following a drone attack in the region on Thursday, two industry sources told Reuters.
The IEA agreed on Thursday to release more than 20 million barrels of fuel to the market.
Those margins rose as high as $95 a barrel in September as diesel supply tightened because of the wars in Ukraine and Iran.
Brent crude was little changed on Thursday, while WTI settled up more than 3% after news that the US was weighing plans to ease restrictions on the world’s "shadow fleet" of tankers and after a big US crude stock draw on hurricane production shut-ins.
(Reporting by Enes Tunagur in London, Sam Li in Beijing and Siyi Liu in Singapore; additional reporting by Stephanie Kelly in London. Editing by Mark Potter, Alexander Smith and Louise Heavens)
