Yet another meeting of the 13 OPEC states, expected in Vienna soon, will be the last chance for the oil cartel to prevent a wholesale drop in prices, well-placed sources here report.
Sources differ sharply, however, on whether the Organization of Petroleum Exporting Countries can finally put its house in order and agree on a new reference price and a higher differential for Nigerian and other African high-quality crude oils.
Some insisted that OPEC would be able to pull off a last-minute agreement. They cited a series of private meetings in Riyadh, London, and Paris, in which OPEC ministers both talked among themselves and contacted non-OPEC members Britain, Mexico, and Norway.
The OPEC strategy was to try to persuade non-OPEC countries to agree on an overall set of prices and production quotas, but it was far from clear Feb. 24 that, with world oil demand so slack, the goal could be achieved.
British North Sea crude oil is in direct competition with Nigerian oil. Mexico, whose overseas debts are more than $80 billion, depends on oil exports and has a clear interest in continuing to export as much as possible.
Other analysts in the City of London put OPEC's chances of agreement at only 25 percent because of the fierce economic and political divisions that blocked decisions at meetings in Geneva and Vienna in December and January.
''And if it does fail,'' says a senior analyst in the City of London, ''prices will be well and truly on the way down.''
The result, he forecast, would be that ''pure oil producers'' like Mexico and Nigeria (those dependent on oil for revenue) would suffer, ''pure consumers'' (like Western Europe) would benefit, and in-between states like Britain, with their own oil supplies, would benefit only if the world recession began to end and global demand picked up.
Meanwhile, closely watched oil spot markets continued to fall, putting strong pressure on official contract prices to fall still more to stay competitive.
Rotterdam spot traders reported Feb. 24 that the market for North Sea crude (the non-OPEC price leader) and Arabian light crude (the OPEC leader) had dropped to $27 a barrel. This meant buyers could use the spot market, which now accounts for about 30 percent of all oil traded, to undercut the new British North Sea price by about $3.50 a barrel.
To reduce the gap between official and spot prices, Britain trimmed its North Sea prices to $30.50 Feb. 18 - and may now have to cut again.
Nigeria, which responded to the British move Feb. 20 with a dramatic $5.50 drop to $30 a barrel, has vowed to match any more British cuts. Lagos depends on oil exports for 90 percent of its revenues.
In effect, two major battles are being fought behind the scenes.
The first is between non-OPEC Britain and OPEC Nigeria. Both have just cut their oil prices substantially, competing for larger shares of a slack world oil market. Nigeria cut more deeply than Britain, thus gaining an edge. Britain is under pressure to cut again.
If it does so, the British government will lose more oil tax revenues, and the value of sterling may fall again. Experts are divided on how serious this would be for the Thatcher government.
The second battle is within OPEC itself. The Gulf states, led by Saudi Arabia , have reportedly agreed with Indonesia, Venezuela, and Ecuador that the official OPEC price of $34 a barrel must come down.
Sources familiar with Gulf thinking said Feb. 24 in London that the new price would be $30 a barrel - and that Nigeria was willing to raise its newly cut price for ''Bonny'' light crude to $31.50.
Iran and Libya have until now wanted to keep the official price so that they can continue undercutting it by discounts of up to $6 a barrel. Iran is at loggerheads with the Saudis over Saudi support for Iraq in the Gulf war.
Iran has been determined until now to undercut Saudi prices to try to topple Riyadh from its position as the OPEC price-setter. A report by the Kyodo News Service in Tokyo says Iran would discount any reduced Gulf prices by $3 a barrel from now on.
Analysts close to Gulf-state thinking say Gulf states and other members are galvanized by the prospect of a price collapse and the loss of revenue that would mean.
Those who are more sceptical make the following case:
OPEC cannot hope to succeed by fixing a new official price alone. It must reach agreement on holding down production, since world demand is still very slack because of the recession and oil conservation.
Nigeria wants to double its oil output to about 1 million barrels a day. But analysts who have been poring over OPEC's current low production figures say the only way Nigeria can sell more is by taking markets from other states - such as Algeria, Libya, and eventually the Gulf itself.Nigerian oil goes to the US rather than to Europe, but Lagos hopes to sell more to Japan. The only way it can do so is by offering low prices. So Lagos is most reluctant to lift its price back to $31.50 a barrel again to please Saudi Arabia, analysts maintain. Saudi Oil Minister Sheikh Ahmed Zaki Yamani has in the past wanted Nigerian oil to be $3 higher than Arabian light, but this looks impossible now.
The two largest OPEC producers, Saudi Arabia and Iran, may find themselves being asked to share a mere 5 to 6 million barrels of output per day. At the moment, Iran is pumping about 3 million a day and the Saudis don't want to drop below 4 million because they need gas produced with the oil to generate electricity and operate plants desalinating sea water.
Monitor correspondent David R. Francis reports from Riyadh:
There is a suspicion here that Saudi Oil Minister Yamani and his counterparts from Kuwait, the United Arab Emirates, Qatar, and Iraq did not reach detailed agreement on production quotas for the various OPEC members or on differentials in pricing that take account of different qualities of crude or distances from the major markets.
The bargaining is shifting to Paris, where Kuwait's Sheikh Ali Khalifa al-Sabah will reportedly join with the oil ministers of Venezuela, Algeria, and, significantly, Mexico.
Mexico is not a member of OPEC. It has not joined partially out of courtesy to its powerful northern neighbor and perhaps also because under American law OPEC members lose access to the generalized system of preferences, a special tariff reduction system the United States grants to developing nations.
Although Mexico is unlikely to join OPEC formally, it apparently has decided to join the discussions and go along with price decisions - in effect becoming a quasi-member.
The dramatically altered world oil market, producing OPEC's worst crisis in its 22-year history, is seen here as having significant political and economic consequences.
For instance, the world oil surplus has brought about a notable decline in the economic and financial might of Saudi Arabia. The kingdom's income is at least halved from its peak as its oil production has slipped from 10.3 million barrels per day (b.p.d.) in January 1981 to 4.65 million b.p.d. in January 1983 - and substantially under 4 million currently.
On the other hand, Saudi Arabia remains largely dependent on the US for the protection of its enormous reserves of oil.
This shift in the balance of Saudi-American interdependence troubles important Saudis here. They consider themselves ''true friends'' of the US.