OIL PRICES have finally begun to fall, demonstrating that they were pushed up this fall chiefly by speculation on war. There is no world shortage. It was fear of future shortages that induced a lot of people to bid high for it as they attempted to fill every last tank, bucket and teapot. To use an uncharitable term, there's been a little hoarding going on.

Even without any oil from Iraq or Kuwait, the world is now producing enough to meet its normal requirements. The worldwide boycott of Iraq is not responsible for this autumn's prices. Because oil traders have begun to think that the prospect for war in the Middle East is now receding, prices have begun to come down. But they are still higher than the balance of supply and demand can justify.

World production in November was the highest since May and higher than the average monthly production in 1989, the International Energy Agency pointed out a few days ago in its monthly report on the oil markets. Stocks were significantly higher last month than a year earlier. There was a shortage briefly last summer, immediately after Iraq invaded Kuwait and the boycott began. By October more than half of the boycotted Iraqi and Kuwaiti oil had been offset by the massive increase in Saudi Arabian exports. The rest has come from smaller but still substantial increases in a dozen other places, from Iran to the North Sea to Venezuela.

The high prices during the past four months have done a lot of damage around the world. Here in this country they are blamed for the recession that now seems to have begun. But, as usual, it's the poorest countries that have suffered most.

While the Eastern European countries are far from the poorest, they have been hit from two directions. Most of their oil has in the past come from the Soviet Union in soft currencies and at artificial prices. But exports from the Soviet Union -- still the world's largest oil producer -- are dropping precipitously as the economic chaos there widens, and as of Jan. 1 all Soviet trade will be conducted in hard currencies like dollars. In addition, some of the Eastern European countries are affected directly by the Iraq crisis. Iraq owes Hungary debts, for example, that it had been repaying in oil.

There's no way to stabilize oil prices without stabilizing the politics of the Middle East -- another reason to pursue the regional security arrangements now under discussion. But the current prices are not the result of tight supplies. There is an element of panic in them, reflecting a shortage that does not exist.