The world oil glut is sucking Nigeria into a sharp economic decline, reducing black Africa's once leading petroleum exporter and economic power to the sideline position of marginal producer.

Nigeria's desperate straits became evident last Saturday when it tried to break out of this downward spiral with an unprecedented unilateral cut in oil prices outside the pricing structure set by its fellow members of the Organization of Petroleum Exporting Countries.

Western analysts said it will be some time before it is clear whether Nigeria's bold break will pay off for the financially strapped nation. Given the present state of the glutted oil market, Nigeria will be fortunate this year to earn more than a quarter of the $26 billion oil export bonanza the country reaped as recently as 1980, a windfall that government economic planners expected to continue though this decade.

Nigeria's first heady days of oil wealth followed the 1973 Middle East war and Arab oil boycott, which, although Nigeria did not participate, boosted oil sales and prices. This caused Nigeria's export income to increase from $2.4 billion in 1973 to $6.3 billion the following year. Another spurt in revenues came after the Iranian crisis when Nigeria's export earnings doubled from $6.6 billion in 1978 to $13.2 billion in 1979. They doubled again in 1980 to a peak of $26 billion.

The huge flow of foreign exchange brought an ostentacious display of wealth among the educated elite, with extravagances such as huge weddings with flowing fountains of imported champagne and whiskey becoming fashionable. The ports were jammed with imported autos, and Lagos became a city of hours-long, sweltering traffic jams.

The influx of money also increased the level of official corruption, despite government efforts to bring it under control. In January, five officials in charge of building the country's new capital of Abuja were charged with a fraud scheme involving $21 million.

The leaders of less fortunate countries began to trek to Lagos in search of aid loans. So Nigeria created a soft-loan agency, with millions of dollars, attached to the African Development Bank, and steered their neighbors to the bank's west African headquarters in Abidjan, Ivory Coast. It is unclear whether Nigeria will be able to continue this largess, the end of which would diminish its continent-wide influence.

With the recent plunge in revenues, Nigeria began to introduce strict currency restrictions that inconvenienced the oil-rich elite. Last year, for example, the amount of hard currency with which Nigerians could travel abroad was reduced from $550 to $340. The restrictions, however, have only doubled the black-market rate for foreign currency, pushing the street value of dollars up to 2 1/2 times the official exchange rate of 78 cents to the Nigerian naira, one western analyst said.

To staunch the flow of deeply depleted foreign exchange reserves, the government last year introduced compulsory advance deposits of 250 percent on the value of each imported car, 200 percent on trucks, 50 percent on food imports (except rice) and 50 percent on medicines, sending the local retail prices skyrocketing and providing a field day for the ubiquitous smugglers. The same items now sell on the black market just under retail prices.

The painful reversal of economic fortunes, being suffered by other Third World oil-export dependent nations as well, has led to stopgap austerity measures that have had the effect of penalizing local manufacturers. Many have been forced to shut down, adding to growing levels of unemployment, according to economists and industrialists here.

Government efforts have had minor beneficial results, but the measures have done little to slow the economic slide.

With a population of approximately 100 million--the largest in Africa--and a labor force estimated at 33 million, Nigeria's sharply contracting economy was a major reason for the abrupt order last month giving 1.5 million illegal immigrants here two weeks to leave.

The immigrants were welcomed during affluent times to do the jobs Nigerians were reluctant to do and to work for less than the minimum wage. But Interior Affairs Minister Alhaji Ali Baba ruled that they had to go, in part, because they were holding jobs Nigerians need.

Still, austerity measures and the expulsion of aliens have reduced further Nigeria's already limited industrial production base. Trying to hold onto dwindling levels of foreign exchange, the government has cut back on issuing import licenses for the raw materials and spare parts needed to keep its factories running.

In a phenomenon that has become widespread since the austerity controls were first introduced last April, Volkswagen's car assembly plant shut down here temporarily in mid-February and laid off 3,000 workers, while a cargo ship from Brazil, with the assembly kits the factory needed, sat idle in Lagos port because the company had neither the import license nor the Central Bank clearance for the foreign exchange to pay for the shipment.

"Yet, consumer items that contribute nothing to employment or the economy are still being imported into the country seemingly on an equal basis with vitally need raw materials and spare parts," said one western economist.

The immediate impact of the aliens' expulsion has been a dramatic drop in the efficiency at Lagos port, where immigrants had made up a large part of the labor force, and the closing down of numerous factories, particularly in Nigeria's struggling textile sector, another western economist said.

"There is no lack of Nigerians to fill the jobs, but they do not have the skills" of many of the expelled aliens, especially the close to 1 million who had come from neighboring Ghana, he added.

Manufacturers who took advantage of illegal immigrants and paid them low wages are having to reduce their production or shut down altogether as Nigerian replacements demand the $200 monthly minimum wage.

Long power blackouts in Lagos severely curtail the manufacturing sector's production, because even the government's electrical power agency has been having difficulty getting import licenses to replace broken machinery in its generating plants, informed Nigerian officials said.

Construction of the country's new $14 billion capital of Abuja, 330 miles northeast of the immensely overcrowded coastal capital of Lagos, has ground to a halt "because the companies were not being paid, and no new construction contracts are being let," said a western commercial analyst. The aliens' expulsion also removed all the skilled, heavy-duty equipment operators from the construction crews, he added.

As unemployment has risen to high, but unmeasured levels, so has labor unrest. The government rejects all suggestions of more than a 20 percent increase in the minimum wage although inflation is calculated at about 25 percent annually.

Nigeria's 19 state governments, which receive their funds from federal oil revenues, face dire financial problems also. When Ogun state Gov. Bisi Onabanjo floated the suggestion that the state's civil servants accept a 50 percent cut in salary, several thousand of them went on strike until he renounced the idea. In Cross River's state capital, Calabar, police used tear gas to break up a crowd of angry civil servants who had not been paid in a month.

In a development that appears to have been common among western lending institutions and Third World oil exporters, such as deeply indebted Mexico, Nigeria massively miscalculated its future petroleum exporting earnings.

Nigeria, which in the days of oil riches lent money to its poorer neighbors, now has trouble borrowing the hard currency it needs.

A relatively low external debt of $12.3 billion leaves Nigeria credit worthy and "underborrowed," but government officials have been unable to borrow from increasingly skittish bankers to make up this year's deficit, expected to exceed a planned $4.3 billion.

Consequently, the civilian government finds itself in the unenviable position of imposing unpopular emergency austerity measures on the eve of its reelection campaign. The government's expulsion of the illegal immigrants was widely popular, but as that issue fades into the background, Nigeria's labor force and political opponents can be expected to become angrily vocal as the economy deteriorates.

The new jobs for Nigerians created by the exodus of illegal immigrants seem to be relatively small victories in the context of Nigeria's entire economy, which has been severely buffeted by the plummeting oil exports even after the government scaled down its budget expectations to a low million-barrel-a-day production level. Production is now less than 500,000 barrels daily.

Nigeria's original budget plans for this year were based on a daily oil production average of at least a million barrels at the price of $35.50 a barrel. Since December, however, Nigeria's oil production plunged from 1.2 million barrels a day to less than 550,000 barrels a day for the first two weeks of February as its customers switched in droves to North Sea oil, cheaper by $2 barrel.

Then Britain's national oil company and the Norwegian government cut the price of North Sea oil to $30.50 on Feb. 18. Nigeria followed the next day with a cut to $30. So Nigeria's original budget is already substantially short on revenues.

The newest oil market developments mean that Nigeria's expected earnings this year of $8.6 billion could drop lower than $7 billion.

Yet, no new austerity measures are planned before national elections this summer, said Transportation Minister Umaru Dikko. Dikko is the brother of presidential energy adviser Yahaya Dikko and is himself one of president Shehu Shagari's principal advisers.