The United Arab Emirates announced last night that it is dramatically increasing its oil production and warned that prices may be cut soon in an oil war following the collapse of the OPEC meeting earlier this week.

In making public the decision to boost output by 45 percent to 1.6 million barrels a day, the emirates' Oil Minister Mana Saeed Oteiba said that he could "almost see now in front of my eyes" a price cut by Arab producers in the Persian Gulf.

The action by the emirates, an ally of leading world oil producer Saudi Arabia, suggested that the Saudi-led bloc of Persian Gulf states was prepared to raise production and reduce prices in an effort to pressure its rivals in OPEC to stop trying to encroach on its share of the market.

The emirates previously had been curtailing production to help the Saudis prop up the Organization of Petroleum Exporting Countries' official price of $34 a barrel, but the two now may be changing policy to try to force their rivals to stop offering price discounts and accept production ceilings.

Whether the Saudis will follow the emirates' example and raise their own production remained unclear, but Oteiba pointedly noted that Saudi output already has fallen to only 4 million barrels a day from a record of 10 million a day about 1 1/2 years ago.

A major increase in Saudi output almost certainly would send world oil prices plummeting, a prospect that all OPEC members insist that they wish to avoid.

Newspapers in the United Arab Emirates and Bahrain predicted cuts in the price of gulf crude, The Associated Press reported. In Saudi Arabia, the newspaper Al Madina quoted Oil Minister Ahmed Zaki Yamani as "not ruling out a Saudi price cut."

["Other OPEC members admit publicly they are selling their crude at a $7 discount, yet they want us to remain committed to the official price so that they may continue selling their crude and increasing their production," Yamani was quoted as saying.]

Oteiba, speaking on a local television station, said that the emirates was increasing its output "to the levels required by our national and Arab commitments" following the "resounding failure" of the meeting that ended in Geneva Monday of the 13-nation Organization of Petroleum Exporting Countries.

"We are no longer willing to continue shouldering [both] our responsibilities and those of states that fish in troubled waters," Oteiba said.

At the meeting, a tentative agreement on OPEC production ceilings to contain the world glut fell apart when the Saudis and their gulf allies demanded that African countries raise their prices a bit and stop trying to lure buyers away from the gulf states. The gulf states suggested afterward that they might let prices slide for awhile to scare Nigeria, Libya and Iran into cooperating in patching together an agreement.

Oteiba indicated that the emirates chose to raise output because it was facing financial problems and needed the revenue. He said that the country had a $1.2 billion deficit in the current budget and that next year the shortfall would double if the old rate of production of 1.1 million barrels a day were maintained.

The emirates' oil minister was upset with the outcome of the Geneva OPEC meeting, saying that the resulting confrontation within OPEC would have "serious economic repercussions" on every country and provoke "the collapse of exchange rates and the international banking system."

"The future now is unknown and unclear," Oteiba said.

He lashed out at Yahaya Dikko, Nigeria's representative at the meeting, who he accused of having a "bias" against the Arab gulf producers and said, "The knife borne by this group has already gone through our flesh."

Oteiba also attacked non-OPEC oil producers, responsible now for more than half the world's total exports, who he said had also worsened the situation by producing at maximum capacity.

But the emirates' oil minister carefully avoided any mention of Iran, the OPEC member and gulf producer that probably has been the strongest challenger to the Saudi attempt to uphold the organization's current pricing structure. The emirates, like the other small Arab states lining the Persian Gulf, last year moved toward a conciliatory attitude toward Tehran apparently because of Iran's diplomatic and military muscle.

The Iranians claim to have raised their output from 1.3 million barrels allotted to them last March to 3.2 million today. In Geneva, Iranian Oil Minister Mohammed Gharazi made clear that the Iranians were raising production not only for economic reasons but also to undermine Saudi Arabia and its control over OPEC as its largest exporter.

It was not yet clear how other Arab gulf producers intend to deal with the looming oil war. The emirates together with Kuwait, Iraq and Saudi Arabia used to wield enormous power within the organization, with the Saudis alone accounting for between 40 and 50 percent of OPEC's total exports.

Kuwaiti Oil Minister Ali Khalifa Sabah yesterday hinted that Kuwait was on the verge of cutting its prices but said nothing about an increase in production. Kuwait's budget also has been running in the red this past year because of sharply reduced oil revenues.

The Kuwaiti minister told the local newspaper Al Watan today that the government was having trouble finding customers for its oil and had not even been able to fill the OPEC quota for Kuwait.

"It is irrelevant to allow Kuwait to produce 1.2 million barrels a day when we cannot find buyers for half that much simply because of circumstances in the world market," he said.

Kuwait's heavy crudes compete directly with similar-quality Iranian ones. But like Oteiba the minister did not mention Tehran and instead blamed African OPEC members for difficulties.