Chinese Import Data Suggests OPEC Is Lying About A Production Cut

Tyler Durden's picture

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.

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knukles's picture

OPEC have always lied about their production "cuts"
After all, they understand the principle of "screw your buddy"

Occident Mortal's picture

China... that bastion of trustworthy economic data.

D Nyle's picture

Arab Lie, never seen that coming

Jim in MN's picture

OT but wow: Alan Dershowitz op-ed 'I'll Quit the Democratic Party if Keith Ellison is DNC Chair'

 

Because ISRAEL

 

http://thehill.com/blogs/pundits-blog/national-party-news/321040-i-will-...

 

A. Boaty's picture

OPEC cheating on production quotas? Say it ain't so! I feel so disillusioned! (sob).

Winston Churchill's picture

Its not really lying.Arabs will tell you what they think you want to hear.

Its a cukltural thing.Same as Indians will always give you detailed directions,not even knowing where

you're going.

Arnold's picture

It is no sin to lie to infidels.

Vlad the Inhaler's picture

Just trying to keep crude afloat until after the Saudi Aramco IPO.  Could be an epic pump and dump.

Davidduke2000's picture

Putin has to destroy saudi arabia for supporting ISIS, hit the oil facilities hard to stop them from pumping for the next 5 years.

besnook's picture

that's crazy , but it would be the funner of the choices, the funnest being to just blow up the entire region with good old fashioned b-52s.

china and russia are trying to bribe the sauds with an outlet from the zionazis. they are guarenteeing replacement income to get leverage on the petrodollar trade that is weakening from fracking usa, inc. all traded in rmb. it is all about de-dollarizing for leverage against the usa/dollar.

if china/russia score the sauds they win. they have almost instant internationalization of the rmb(because all those other chinese traders have rmbs). the sauds need a chinese outlet/replacement so they can keep buggering boys. the usa needs a dollar adjustment to pay off the debt with a discount. you get poorer.

Steeley's picture

"Chinese Import Data Strongly Suggests OPEC Is Lying About A Production Cut "

Ya think?

The only surprise is that anyone actually thought the whole charade was even possible in the first place.

 

Dr. Engali's picture
OPEC lying? Get the fuck out?
besnook's picture

i would bet there is some mid east deal, vis a vis syria, if russia stepped back and saudi filled the gap. is this oil traded in rmbs? or dollars?

gregga777's picture

OPEC = Organization of Petroleum Exporting Cheaters

oncemore's picture

Who takes OPEC seriously?

assistedliving's picture

and still $55 than $35.  amazing

Insurrexion's picture

Sue fucking China.

Make them prove their story is true.

Make them prove their sources.

arrowrod's picture

It says right in the Koran, page 22, misdirection of infidels is OK.

I'm always amazed talking heads blather about the effect on oil prices.  AGAIN!

Not even Charlie Brown is that stupid.

just the tip's picture

mostly Russia, who foolishly assumed that Saudi Arabia et al would be true to their word

fuck me.  they believed heinz-kerry, and now i find out they believed KSA.  i'm going to have to rethink my thinking of the putin/lavrov brain trust.

Ink Pusher's picture

Best take a good long look at those "reported" numbers again and see who else is bullshitting Eh? Anyone that believes for a nanosecond that these draw-down and shipping numbers are anywhere near accurate is going to get a call from me very soon.... I want them to hook me up with their hallucinogen dealer.

Ink Pusher's picture

Incidentally Here's a small part of the USGS report due to be released in OCT. that I just got my hands on..Directly Linking Fracking to Earthquakes.

* Things are going to get very twisted up for all frackers by year end . http://www.cpr.org/sites/default/files/rubinstein_article.pdf

rjs's picture

they are not lying.  their own monthly report clearly shows that they produced 1.6% more in January than a year ago:

http://www.economicpopulist.org/content/despite-opec-cuts-global-glut-gr...

and as the url says, OPEC's own figures show global supply exceeding demand by a million barrels a day...

 

the trouble is, ZH and the rest of the media do not look at the data.