Gulf Crisis a Challenge to OPEC’s Credibility : Energy: There is growing division and increased politicization among members of the 30-year-old petroleum cartel.

The Iraqi invasion of Kuwait and the resulting Middle East standoff has disrupted the workings of the 13-member Organization of Petroleum Exporting Countries and for now has rendered it all but irrelevant, analysts said.

Less clear is whether OPEC will emerge from the current crisis intact, and if it does, how it will have changed. Possible scenarios:

* If Iraqi strongman Saddam Hussein is ousted and Kuwait is reconstituted as a sovereign state, OPEC could survive pretty much as it is, with Saudi Arabia back in control.

* If Hussein retains his hold on power when the crisis is resolved, OPEC will again be faced with a power struggle between Iraq-led “price hawks,” who favor high world oil prices and tight supplies, and Saudi-led “price doves,” who believe in moderate prices and good relations with consuming nations to ensure continuous demand.

Other analysts argue that the current crisis highlights the growing divisions among OPEC members, underscores its politicization and sets the stage for defections from the cartel.

The resulting conflicts could even lead to the ultimate dissolution of the 30-year-old organization if disputes escalate further. One scenario would dissolve OPEC and create a new mini-cartel of Persian Gulf oil-producing states and Venezuela, which already control the majority of OPEC’s oil production and reserves. Another has the United States taking a much greater role now that it has placed troops on the line.

“I think this is by far the worst crisis (OPEC) has faced, and it’s really a battle for the soul of the oil market for the future,” said Daniel Yergin, president of Cambridge Energy Research Associates in Massachusetts.

“Is it going to be one of cooperation between producers and consumers, which has been the dominant theme of the last few years, or will it return to the old pattern of confrontation, which is what Saddam Hussein was pushing for: using the ‘oil weapon’? It’s a struggle for the hearts and minds of the oil market,” he said.

Analysts caution that OPEC has survived previous crises and defied predictions of its doom. “It’s far too early to write an obituary for OPEC,” said Thomas E. Wallin, group editor for the widely read newsletter Petroleum Intelligence Weekly. During their bitter eight-year Persian Gulf war, for example, Iraq and Iran continued to send ministers to OPEC meetings.

What’s beyond doubt is that the rules of OPEC’s game have changed dramatically. Only a month ago, OPEC was wrestling with an overabundance of oil on world markets and overproduction by its members.

Iraq, the leading price hawk, emerged from a July OPEC meeting as the de facto leader of the cartel, signaling a more confrontational stance with consuming nations such as the United States.

But Iraq’s Aug. 2 invasion isolated it from the world economy, and the Middle East crisis has ironically thrown control of the organization back to Saudi Arabia, the leading price dove, at least for now.

In meetings scheduled to resume today, 11 OPEC ministers appeared poised to endorse a call by Saudi Arabia to hike production quotas to allow member nations to pump out more oil to make up the worldwide shortfall of crude resulting from the international embargo of Iraqi and Kuwaiti crude, a move designed to keep prices moderate and oil flowing.

But OPEC has nevertheless lost its importance during the current crisis, analysts said. For one thing, Saudi Arabia and Venezuela have already said they will boost production of oil, whether OPEC agrees to lift quotas or not.

“This OPEC informal meeting hasn’t got much meaning, but it does provide a nice endorsement of what Saudi Arabia and Venezuela were going to do anyway,” said Joseph Story, a Middle East expert who runs Gulf Consulting Services in Washington.

The meetings are intended more to preserve the image of OPEC as a going concern, said Vahan Zanoyan, senior director of Petroleum Finance Co. in Washington. “All of this, the meetings and the deliberations and the motions they are going through are to keep the door open for tomorrow, . . . to give (OPEC) credibility and face.”

That credibility may be important once the crisis is resolved. “There’s still going to be a need to coordinate policies among producers,” Zanoyan said.

It was that need that led to the creation of OPEC in the first place--ironically, at a meeting in Baghdad. OPEC was formed in 1960 by representatives of Saudi Arabia, Iran, Iraq, Kuwait and Venezuela as a vehicle to wrest control of prices from the multinational oil companies that had previously controlled them.

The cartel was intended to be strictly apolitical. But “in the last couple of years, it has become increasingly clear that oil pricing and production decisions are part of the struggle for power within the Middle East,” said G. Henry Schuler, director of energy security programs at the Center for Strategic and International Studies in Washington.

Nations such as Saudi Arabia that have the most spare production capacity--and therefore the greatest ability to influence world oil markets--have traditionally used OPEC to further their own agendas, analysts said.

But the current crisis underlines the split within the cartel among the oil-rich states of the Persian Gulf and the non-Gulf states such as Indonesia that have fewer reserves. Of the non-Gulf nations, only Venezuela has any significant capacity to pump out more oil.

“I would have thought that those states outside the Middle East who have no interest in Middle East politics would find that they’ve got nothing to gain and much to lose by associating themselves with Arab quarrels,” Schuler said.

Still, most analysts believe that inertia, if nothing else, will hold OPEC together once the current crisis fades into memory. And it could attract new members in a post-Cold War economy. The most likely new member: the Soviet Union, the world’s largest producer of oil.

OIL PRICES REBOUND: The cost of crude bounced back on news of the latest Persian Gulf developments.