OPEC and its pricing setup weather some economists' forecasts

About this time last year, a number of oil economists predicted that OPEC and its price-setting system for crude oil were doomed. But, notes Dr. Fadhil J. Al-Chalabi, deputy secretary-general of the Organization of Petroleum Exporting Countries, the system ''did work, is working , and, I believe, will continue to work. The stakes are too high not to allow the system to work. The alternative is a further weakening of the price structure which is not in the interest of anyone. It will not serve the interests of the consumers themselves.''

After months of harsh bargaining, the members of OPEC agreed in London in March 1983 on a cut of $5 in the price of oil, to $29 a barrel, and on country production limits for its members that added up to 17.5 million barrels daily.

Many suspected financially hard-pressed OPEC members would cheat, producing more oil than their quotas. Sometimes the oil press has carried articles saying that Nigeria or some other nation has violated its quota. Dr. Al-Chalabi says that ''to my knowledge'' no member has gone beyond its quota except for short-term fluctuations.

''Overall one can say with confidence there has been very strict adherence to quotas and prices.''

OPEC production in the first quarter of this year, he admitted, has been marginally higher than 17.5 million barrels daily. But he expects it to fall below that level in the current quarter.

''What is important is the averages,'' he said.

Moreover, Dr. Al-Chalabi maintains, OPEC has been getting informal support of its cartel price structure from two major non-OPEC producers, Mexico and the United Kingdom. Mexico has indicated it will not exceed a production target of 1 .5 million barrels daily in exports. Britain has since the beginning of the year decided not to change its price for crude.

''This is very positive,'' Dr. Al-Chalabi noted last week during an interview in his office overlooking the Donau canal here.

Indeed, the top OPEC economist maintains that officials of oil-importing industrial nations are quietly glad to have OPEC holding up the price of oil. Before 1973-74, when OPEC quadrupled the price of oil, the price of crude had been stabilized internationally by the major oil companies and domestically in the United States by import quotas and the Texas Railroad Commission, which had a system for limiting Texas oil production.

Without OPEC's price structure today, he said, other oil-producing nations could not economically justify huge investments in new oil exploration and production; the expansion of coal output and nuclear power; or maintaining the momentum in energy conservation.

World economic recovery has not so far resulted in any surge in the demand for OPEC oil, he reports.

But compared with two months ago, Dr. Al-Chalabi pointed out, the spot prices of crude and its products have strengthened. ''Demand and supply are fairly well balanced. No one is selling at a discount. There are no reports of huge quantities of oil seeking a buyer.''

He expects world demand for crude to grow by about 1 million barrels daily in 1984, mostly in the last half of the year. OPEC production will increase something less than that, because ''supplies outside OPEC will increase,'' he said.

The OPEC official was critical of the Soviet Union and Egypt for following spot market prices quickly with their own crude export prices, holding that this did not aid the stability of prices on the market.

Dr. Al-Chalabi said OPEC has had some ''preliminary contacts'' with the Soviets about this practice, advising them that it was not in their own long-run interest. The Soviets get about half their hard-currency earnings from oil and gas. Last year, they increased crude exports significantly. As a group, the Soviet bloc shipped 1.8 to 1.9 million barrels daily, he said.

The OPEC countries, Dr. Al-Chalabi says, have been hard hit by the drop in volume of their sales. Non-OPEC countries added some 5.5 million barrels daily to their output after 1973, leaving the OPEC nations with only a 23 percent share of world energy demand in 1982, compared with 40 percent in 1973.

Now the OPEC countries are suffering from a drop in the purchasing power of the American dollar. Their oil is priced in dollar terms, but most of their purchases are made in Europe, Japan, or elsewhere.

In 1983, OPEC oil revenues were around $145 billion, down 45 percent from 1980. Moreover, the appreciation in the value of the dollar after March 1983 was not sufficient to offset in purchasing power that month's $5 price drop for oil.

The OPEC oil ministers will meet here again in July. Mr. Al-Chalabi expects a quiet session. And if he's right about world demand, the world should enjoy stability in crude oil prices for some time. That could well be welcome to many businessmen making their calculations for energy investments of various kinds.