Word: glutting
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...Portillo's economic mistake was to ignore the consequences of the global oil glut that began to develop in early 1981. Although some oil-producing countries began to discount their prices in response to the weak market, Mexico stubbornly held out a while longer. As a result, customers canceled their contracts. All the while, López Portillo continued to borrow money as if nothing had changed. But rising international interest rates began to put a severe strain on Mexico's ability to meet its loan obligations...
...pumping crude at levels above their ceilings (see chart), as well as discounting the price to their customers. As a result, by last week prices on the unregulated spot market had dropped to $29 per bbl., down from an alltime high of $42 two years ago. Meanwhile, a worldwide glut of oil has developed, swelling to more than 4 million bbl. per day in excess of demand...
OPEC Dilemma How to handle the glut...
...Organization of Petroleum Exporting Countries has sent the price of crude oil spurting, bringing riches to the 13-nation oil cartel and economic agony to just about everyone else. But now the combined effects of conservation and worldwide recession have left oil prices skidding, created a global supply glut where once there was scarcity, and shaken the foundations of the formidable cartel...
...that they will favor holding the official price at $34 per bbl. As for production, the Saudis might decide to raise the spring quotas by about 10%, which would legitimize the cheating with a return to pre-March levels, while perhaps trimming their own output to keep the glut from growing worse. At the same time, the Riyadh government would stand ready to provide low-interest loans to help tide over financially squeezed cartel members until the world economy starts to recover and, the Saudis hope, oil sales begin to improve...