OPEC set a limit on the 13 countries' combined production of 16 million barrels a day. The largest quota, as usual, was assigned to Saudi Arabia, a bit more than 4.3 million barrels a day. During the year, OPEC has managed to keep within the 16-million barrel limit-in fact, Russell Seal, general manager of British Petroleum, estimated recently that OPEC production had actually slipped below 15 million barrels a day-but only because Saudi Arabia, trying to salvage the agreement, has cut its own production substantially, to somewhere between 2.5 million and 2.8 million barrels a day. Nigeria and others are obviously ignoring their quotas and pumping more oil than is authorized.
New producers such as Mexico and Britain have emerged since the OPEC heyday in the 1970s, and these producers no longer see any need to stick to OPEC prices. The price of Britain's North Sea oil and Mexican oil have dropped in recent weeks, putting more pressure on OPEC to cut its price in order to compete.
The crisis atmosphere around OPEC is a far cry from the heady days not so long ago when OPEC was increasing prices and causing economic shocks. The price reached a high point of $34 a barrel in 1981, but the realities of the market caught up with OPEC in 1983 and forced it to lower the price, for the first time, to $29 a barrel. That came down to $28 a barrel in January of this year, and could drop even more by the end of the week.