Brent holds above $107 as Yanbu stocks cover only days of Saudi Red Sea exports

Brent crude traded above $107 a barrel in early Tuesday dealing after a 1 percent gain on Monday. Reuters put the contract at $106.93 at 0026 GMT, up $1.24. West Texas Intermediate was at $102.65, up $1.29. A live Gulf board later in the morning showed Brent near $106.97 and WTI near $102.78. The two benchmarks remain about $4 apart.

The bid is a duration trade. Saudi Arabia's East-West pipeline, used since the Iran war to move about 4 million barrels a day to Yanbu on the Red Sea and around the Strait of Hormuz, is still shut. That volume is about 4 percent of global supply. Traders told Reuters that Yanbu storage can support exports for five to seven days. After that, unless the line returns or more oil is pushed through Hormuz itself, Saudi barrels available for export start to thin.

Riyadh has not published a repair timetable. One earlier report, citing the kingdom, put the outage at three to five weeks. ING's Warren Patterson and Ewa Manthey wrote that it is unclear how severe the damage is or how long the line stays down, and kept a fourth-quarter base case of $80 Brent on the view that sizeable volumes are still moving through Hormuz. Suvro Sarkar at DBS Bank took the other side of the same facts: if Yanbu runs dry before the pipe is back, he said prices could test $120 in the near term.

Monday's session had already shown how fast the tape can run and fade. Brent rose as much as 5 percent after the shutdown news, then settled with a 1 percent gain below $106. Tuesday's open added another dollar. That is not a panic gap. It is a market that has priced a short outage and is now asking whether five to seven days of Red Sea stocks is the right assumption.

Two other doors that might have calmed the bid stayed shut. Oman postponed the Salalah meeting that was supposed to put Iran and Gulf states in a room over Hormuz lanes. Bahrain had already refused to attend. Iran says Saudi Arabia asked for the delay. Separate Houthi claims of strikes on a Saudi air base, and the group's hold on Red Sea islands, add a second risk to the Yanbu route even if the pipe is repaired. The workaround built to avoid Hormuz now has its own threat list.

The calendar that matters for physical barrels is shorter than the diplomatic one. Five to seven days of Yanbu inventory, counted from last week's halt, runs into the middle of this week. If liftings from the Red Sea port slow, Asian and European refiners that switched to that route after Hormuz tightened will have to bid for alternative grades. That is how a pipeline story becomes a crack-spread story.

Prices on Tuesday morning still sit well above the ING fourth-quarter case and well below the DBS stress case. The number that will decide which of those two notes ages better is not a speech in Vienna or Salalah. It is the first official line from Saudi Aramco on when East-West pumps again, and whether Yanbu is still loading at last week's rate when that line is published.

For now the tape is doing simple arithmetic. Four million barrels a day off a pipe, a port with less than a week of buffer, and no date on the repair order. Buyers who can wait for $80 will wait. Buyers who need a cargo this fortnight are already paying $107.