Oil glut: OPEC may have its figures wrong

Will the oil glut soon be over? Will prices stop falling? Has OPEC devised a plan to soak up the world's surplus oil?

OPEC countries, meeting here this weekend, hope the answer is ''yes.'' For the first time, they have formally agreed to cut oil output to prop up their benchmark price of $34 a barrel.

But OPEC's premise for its strategy could be in question.

Some, like Sheikh Ali Khalifa Sabah of Kuwait, think the glut arose because oil companies ''psyched out'' the oil-producing nations by juggling their inventories. All OPEC ministers attribute the sharp decline in oil prices to major oil companies unloading their surplus stocks as well as a campaign in the media to talk down prices.

The assumption, at least within OPEC, is that the crisis has been created artificially and that in time oil prices will bounce back again.

But a number of oil experts believe that OPEC itself has badly miscalculated and that other factors are at work which not only explain the fall in prices, but which might also force the glut to stay around for some time yet.

This school of thought suggests that what has caught OPEC unawares is greater-than-expected conservation by Western countries, a recession, and a rise in the production of non-OPEC oil. Non-OPEC countries now account for as much as 60 percent of the noncommunist world's oil.

Most of the cut in oil production at the Vienna emergency meeting was done by Saudi Arabia - which is reducing production 500,000 barrels a day. Other countries agreed to trim a total of 200,000 barrels a day. That will drop OPEC daily flow to 17.5 million barrels, down from the current 18.2 - and far below the peak of 31 million barrels three years ago.

OPEC members hope that cutting output will end the rapid fall in prices threatening their oil revenues. One reason for cutting oil production was to maintain the existing $34-a-barrel benchmark, even though some OPEC members, like Iran and Nigeria, have been forced to sell their oil for a good deal less.

If the cutbacks suffice, price pressures may ease and discounts to consumers may stop.

In an interview, Kuwait's oil minister, Ali Khalifa Sabah, affirmed his confidence that the new OPEC strategy would work because the financially strapped producers were now emboldened to ''sweat it out'' until inventories are down in the summer and demand rises.

A key unknown in all this is how closely OPEC production will approximate market realities.The recession, for instance, could deepen and cut demand even more. Another wild card is the war between Iran and Iraq. If that ends soon, their output there could surge.

The OPEC agreement in Vienna was closely fought, and the atmosphere recriminatory. Deep political fissures were bridged only with difficulty. The Saudis were accused, but only in the corridors, of having helped to precipitate the price crisis through earlier refusal to cut output.

Whatever the outcome, the OPEC meeting here in this beautiful Austrian capital was significant for producing the first formal agreement by OPEC members. Previously, OPEC members operated on a gentlemen's agreement.

OPEC's next scheduled will be on May 20. OPEC output -- by country

Output of the 13 OPEC nations is listed at its peak in 1979, shown in parentheses (), and at levels expected under this weekend's agreement. Figures are in millions of barrels per day:

Saudi Arabia (9.7) 7.65, Iran (3.5) 1.2 , Iraq (3.4) 1.2, Kuwait (2.2) 0.8, UAE (1.8) 1.0, Qatar (0.5) 0.3, Algeria (1.2) 0.65, Libya (2.1) 0.75, Nigeria (2 .3) 1.3, Venezuela (2.2) 1.5, Indonesia (1.6) 1.3, Gabon (0.2) 0.15, Ecuador (0. 2) 0.2. Total for all of OPEC: (30.9) 18.00. The actual total is expected to be 17.5 million with additional cuts by the Saudis.