Global oil glut; Price cuts cast shadow over oil nations

The global oil glut -- which is threatening to knock the bottom out of the oil market -- is having dramatic, unexpected consequences.

Among the surprise effects of the surplus, which has forced major producers to sharply cut prices in recent days, are:

* The OPEC countries, until recently regarded as the new barons of the world's economy, are finding their overflowing coffers suddenly depleted.

The reversal has been so marked that only four OPEC countries - Saudi Arabia, Qatar, Bahrain, and Kuwait -- will balance their domestic budgets this year. Among the less fortunate is Nigeria. A year ago, it was lending surplus cash to international banks. Now Nigeria has been obliged to seek $2.3 billion in loans.

* The collapse of the Arab oil embargo against South Africa. Frank Kanzen of the Shipping Research Bureau in Amsterdam reported that in recent months as many as 26 oil tankers have sailed brazenly straight from the Gulf to South Africa .

* Saudi Arabia, the oil king, which until now has had the clout to be the pacesetter of world oil prices, no longer has the leverage to stabilize prices and end the world glut.

OPEC's current president, Mana Said Oteiba, who is also the United Arab Emirates oil minister, flew to Riyadh March 2 to convince Saudi Oil Minister Sheikh Ahmad Zaki Yamani that an emergency OPEC summit sometime this month is an urgent necessity. So far, however, Yamani has rejected pleas from Mr. Oteiba and other Arab OPEC members.

''The Saudis don't want to admit publicly that they're no longer capable of controlling the market,'' said Robert Poulliot, a Cyprus-based petroleum analyst.

* Growing infighting among Arab OPEC countries which had formed a formidable oil cartel. Even Gulf allies like the Emirates, Kuwait, Qatar, and Bahrain, have angrily denounced the Saudis for not cutting back production. They argue that if the Saudis tightened their crude output from their official level of 8.5 million barrels per day to 6.5 million, it would soak up the glut.

However, informed petroleum sources in London claim that the Saudis already reduced production -- but with no effect. These sources maintain that when the Aramco participants -- the four main US oil companies which are Saudi Arabia's biggest customers -- asked to cut back on purchases, Sheikh Yamani quietly agreed. Current Saudi production levels are estimated at just below 6.9 million barrels a day, and falling.

However market analysts in London and Rotterdam claim that despite the Saudis' secret cutbacks, the world market still has an extra 2.5 million to three million barrels sloshing around daily. Even Saudi Arabian light crude -- OPEC's standard price measure -- has taken a battering. Traders on the Rotterdam spot market report that Arabian light now sells for $29.50 per barrel.

Meanwhile the rush by Britain and other oil producing countries to win customers by desperately slashing crude prices is setting off a fierce price-cutting war among oil exporting nations similar to the one being fought by streetcorner gas stations in Europe and North America, but on a billion-dollar scale.

The latest round of bargain rates illustrates the desperation of oil-selling countries:

* Britain reduced North Sea oil prices March 2 by $4 to $31 per barrel, its second price cut in a month.

* Venezuela knocked $2.50 off the price of its high- and low-grade crudes March 1.

* Last week Mexico sliced $2.50 off its $35 per barrel charge.

* Most desperate of all is Iran, whose cash reserves have been depleted by a lengthy war with Iraq. London brokers report Iran is dumping crude on the market for under $27 a barrel, down from $36 six months ago.

In London, on the Rotterdam spot market and in the Mideast, petroleum analysts express concern that the latest wave of price-slashing will soon force competing countries to lower theirs.