OPEC+ impasse seen lasting until next month, JP Morgan  

Quantum Commodity Intelligence – The deadlock between Saudi Arabia and the United Arab Emirates on a deal to increase oil output from August could last into next month prompting further prices increases, said JP Morgan analyst Christyan Malek.

According to the report in Saudi-based Arab News Tuesday, Malek said a breakthrough could take up to six weeks to finalize a production agreement, "as OPEC undergoes the due process of examining the case for higher baseline production."

"In the end, we expect Saudi to get its way, but not without the tail risk of much higher oil prices," Malek wrote in a research note to investors.

"The proposal led by Saudi and Russia of an increase of 400,000 barrels per month starting from August has yet to be endorsed by the UAE, despite the fact that it serves to help neutralize future deficits and control the oil upside," he added.

In the absence of additional barrels, the world's big consumers would draw down inventories in the second half of the year, possibly to below the five-year average OPEC+ uses as its yardstick, raising the price of crude in an "incrementally bullish" way.

"In turn, we think this could prompt the UAE to resolve a mutually beneficial framework within OPEC," Malek said.

"We do not expect a total breakdown similar to last year's price war and our best case is that the parties retain the desire to broker a deal," he added.