To those cynics who accuse the self-monitoring OPEC, and its various adjunct agencies, of lying that it has implemented last year's agreed upon production cuts, China just released January crude import data, which validates this skepticism.

As JPMorgan writes, while IEA estimated the OPEC crude oil production fell by 1mbd to 32.06mbd in January, suggesting an initial compliance of 90% with the output agreement reached end 2016, the latest oil supply details released by China customs today suggest a reduction of supplies was not yet seen by China, the world’s largest oil importer.

In fact, quite the contrary: crude oil shipments from the 11 OPEC nations committed to a 1.2mbd output cut increased by 28% yoy, and more importantly, rose 4% from December 2016 - in a time when production was supposed to be declining - to 4.6mbd in January, accounting for 57% of China’s total oil imports.

Ironically, if anyone was cutting it was the non-OPEC nations, mostly Russia, who foolishly assumed that Saudi Arabia et al would be true to their word: non-OPEC countries led by Russia that also agreed to a cut boosted their January supplies to China by 40% yoy, but saw a 10% drop sequentially, in line contractual expectations. Comparing January 2017 levels with the 2016 average, China’s crude oil imports from the committed OPEC and non-OPEC producers gained 6%/13% respectively, while the country’s total oil imports gained 5%.

Some details:

• Saudi, Angola and Iran lead OPEC supply growth to China. According to the China Customs’ buy country oil supply data, Saudi Arabia boosted shipments to China by 19% yoy and 41% mom to 1.19mbd in January (16% growth versus the 2016 average). Imports from Angola increased by 63% yoy and 46% mom to 1.17 mbd last month (33% higher than 2016 average), while volumes from Iraq jumped by 43% yoy  and 12% mom to 0.83mbd (14% higher than 2016 average).
• Russia and Oman drive non-OPEC supply growth. Among the non-OPEC countries that committed to 558kbd production cut from January, Russia’s oil supply to China increased by 36% yoy but fell 9% mom to 1.09mbd in January (3% higher than 2016 average), and Oman supplies expanded by 47% yoy and dropped 5% mom to 842kbd (20% higher than 2016 average).

It becomes even more blatant when charted: while total OPEC supply to China rose to a 4 month high, the combined oil supply from Saudi Arabia, Angola and Iraq in January soared to the highest a year, quite the opposite one would expect if the countries were cutting production instead of merely seeking to grab market share.

And on a % basis:

So if indeed OPEC, or rather three specific OPEC members Saudi Arabia, Angola and Iraq have been violating the Vienna deal at the expense of other OPEC and non-OPEC members, who naively followed the terms of the production cut agreement, it would imply that OPEC has gained market share at the expense of non-OPEC. Sure enough, that is precisely what the next chart shows, which demonstrates that OPEC's share of Chinese imports jumped from 50% to57% in January while that of non-OPEC predictably plunged.

Meanwhile, as the above sleight of hand was taking place, Saudi Arabia achieved precisely what it wanted: it has regained the position of largest crude oil supplier to China, once again surpassing Russia.