An emergency meeting of oil ministers of the Organization of Petroleum Exporting Countries broke up in disarray today when a plan to fix production quotas fell apart in a dispute over prices.

The failure of OPEC ministers to agree on how to prop up the official price of $34 a barrel during a time of shrinking world demand exacerbated rivalries within the 13-nation cartel and portended a further slide in oil prices.

Saudi Arabia's oil minister, Sheik Ahmed Zaki Yamani, described today's session as "a complete failure" and warned that a cut may be necessary in OPEC's official $34 benchmark price.

"Maybe the right price is less than $34 a barrel, but not much less. Right now our price is too high for the world market," Yamani said. He attributed the meeting's failure to refusal of several OPEC members to adjust their prices to reduce competitive pressure on the Saudis and their Persian Gulf Arab allies.

In recent months, attempts to restore OPEC unity have floundered because such hard-pressed members as Nigeria and Venezuela have tried to sell as much oil as they can to finance their large debts.

Moreover, the Iranian government of Ayatollah Ruhollah Khomeini has strongly challenged Saudi dominance within OPEC by offering price discounts and stealing buyers from the Saudis.

In an apparent bid to extend its political influence and to finance its costly war against fellow OPEC member Iraq, Tehran has raised its oil production to 3.2 million barrels a day, nearly triple last year's assigned quota of 1.2 million barrels.

The widening split aligning Iran and financially strapped OPEC members against Saudi Arabia and other gulf sheikdoms was demonstrated in a vitriolic denunciation of Riyadh's role by Iran's oil minister, Mohammed Gharazi, after today's meeting.

"Saudi Arabia has lost its major role in OPEC," Gharazi said. "Iran's political strength has forced Saudi Arabia to cut its oil production from 5 to nearly 4 million barrels a day. Any reduction in Saudi production that is added to ours means a victory."

Gharazi accused the Saudis of raising the issue of oil pricing as "an invention to cause the collapse of the conference." He stressed Iran's support for OPEC members opposed to the gulf Arab states, saying, "We will defend these oppressed peoples."

[In Riyadh, the Saudi Finance Ministry issued a statement warning Tehran that it was "working against the interests of Iran itself," The Associated Press reported.]

OPEC had reached an agreement in principle last night to establish individual production quotas under a new joint OPEC ceiling of 17.5 million barrels a day. The deal dissolved, however, when Saudi Arabia and Kuwait failed to persuade African producers to raise prices to make African crude less attractive to buyers than oil produced by the gulf Arab states.

Nigeria, Libya and Algeria have encroached on the gulf states' share of the market by asking roughly the same price, or even lower prices, for their oil even though it is preferred by companies because it is lower in sulfur, cheaper to refine and closer to U.S. and European markets.

The chief of the Nigerian delegation, Yahaya Dikko, said that it was out of the question "for African producers to be asked to raise prices at a time when crude oil prices are depressed and the market continues to deteriorate."

The collapsed accord on production had been designed to combat the world oil glut, which threatens to accelerate a downward drift in prices unless the Saudis and their allies continue to scale back their production to shore up the market.

As other OPEC members have disregarded production ceilings set last March, Saudi Arabia has been forced to reduce its output to 4.3 million barrels a day from more than 6 million barrels to maintain the $34 price. Kuwait also has reduced its production substantially.

The Saudis and Kuwaitis have complained that in spite of such sacrifices, they cannot sell their oil because they are being undercut in the market by other OPEC members offering discounts that Yamani claims are as much as $7 below the official price.

"We do not want a price war because this would be harmful," Yamani said. "The collapse of OPEC's price structure would mean many bankruptcies of American companies and cause many banks to go under."

Bankers have stressed that a drop in oil prices to $25 a barrel would force several oil-producing countries, such as Mexico, Nigeria and Venezuela, to renege on debt repayments to U.S. banks because of a sharp fall in oil revenues.

Yamani denied that the failure of the meeting signaled the demise of OPEC but admitted, "I don't see a bright future."

The Saudi minister predicted that North Sea oil will be reduced in price by two or three dollars a barrel in the next few days and added, "I think February is going to be an important month."

The Saudis and their gulf oil allies believe that once Britain cuts the price of North Sea oil, the downward pressure on prices will be so strong that Nigeria will have to bow to demands to settle the dispute on price differentials so that OPEC can reach agreement on new quotas.

Yamani said that demand for oil is particularly low because the prospect of lower prices has induced many consumers to draw down their inventories rather than buy oil on the market. He accused other OPEC members of contributing to this expectation.

"Some of the members relaxed and felt that we [the Saudis] would carry the burden of protecting the $34 price forever," Yamani said. "Our policy now is to wait and see. They can go home with some good food for thought."

Oil analysts believe that OPEC will wait for Britain to cut prices, then observe how the markets respond and call a new meeting early in February.

"I don't believe anybody wants to risk a steep drop in the market with reduced prices," Venezuela's oil minister, Humberto Calderon Berti, told reporters. "I think you will see a new conference sooner than you believe."

Nigeria's Dikko said that he was surprised by the Saudi insistence on linking the production agreement to the price dispute.

"Nigeria and the African states argued that setting production quotas and a ceiling at 17.5 million barrels would help resolve the situation for now," Dikko said. "We believe that the price differentials could be handled at a future meeting after a group of experts have studied the question."