It was early October and the Saudi oil minister, Sheik Ahmed Zaki Yamani, was engaged in a task full of symbolism for this giant of the world's oil exporters and for the 13-nation Organization of Petroleum Exporting Countries as a whole.

Yamani was visiting Cairo to plead that Egypt and other marginal non-OPEC producers not slash their prices and help OPEC hold its $29-a-barrel line.

That Saudi Arabia, OPEC's kingpin with a capacity for producing more than 10 million barrels of oil a day, had been reduced to consulting with a small-time producer like Egypt, which exports fewer than 300,000 barrels on a good day, was a startling reminder not only of the loss of power of the Third World's mightiest cartel but also of the Saudi kingdom's own shrunken stature on the world oil scene.

Having ridden the crest of the 1973 oil boom to unimaginable heights of wealth and influence, Saudi Arabia today suddenly confronts a radically different set of economic and political realities at home and abroad as the source of its power ebbs away in the glutted oil market.

Beset by its first major recession and facing the seemingly unending Iranian-Iraqi war in the Persian Gulf as well as a dangerously divided Arab world, the ruling House of Saud has turned inward during the past two years to bolster its ramparts against the mounting dangers of a hostile outside world and steel itself against a weakening domestic economy.

To all appearances, it has given up its aspirations of the early 1980s of wielding its oil and financial clout to become a leading Arab and Third World power.

In many ways, the world the Saudis operated in only three years ago is much different today.

Instead of dominating Arab politics, the kingdom finds itself caught in the sharpening rivalry between a militarily powerful Syria now at the peak of its power and a reemerging Egypt seeking to resume its old role of Arab-world leader.

Two years ago, Egypt's prominent political writer Mohammed Heikal, commenting on the consequences for the Arab world of the Israeli invasion of Lebanon, observed in an interview that "the Saudi era" had come to an end.

It had been an era, he told the Beirut weekly Monday Morning, in which the Arabs thought they could compensate for the military imbalance in the Arab-Israeli equation with their oil, money and political leverage in the West. Lebanon had proved all this to be an illusion, he said, leaving the Arab world "full of the debris of a collapsing era."

"A new Arab era is inevitable," he said, predicting that it would sprout in Egypt and blossom when Cairo returned to the Arab world.

In many ways, the "Saudi era" does seem over and, as once-dominant OPEC loses its control over the increasingly erratic oil market, Saudi influence in the oil cartel and in the Arab world has waned. The kingdom has had to accept a three-fifths cut in its production and a $60 billion drop in oil revenues during the past three years.

The Saudi effort to set up a longterm stable and predictable pricing structure, which Yamani personally worked so hard to fashion, has failed.

Saudi money and diplomacy have been unable to control troublesome events in the Arab world. Repeated high-level Saudi attempts to reconcile the rival Baath Socialist leaderships in Syria and Iraq have gotten nowhere, and Syria virtually has wiped out Saudi influence in Lebanon.

Meanwhile, after investing tens of millions of dollars and much diplomatic muscle to build up the leadership of Yasser Arafat in the fragmented Palestine Liberation Organization, the Saudis now are watching powerlessly as he fights an uphill battle against Syria and its Palestinian allies to hold onto his ebbing power.

The current paralysis in Saudi diplomacy is reflected in the politics surrounding the convening of the next Arab summit conference, scheduled to be held in Saudi Arabia. Initially set for November 1983, it has been postponed three times by the Saudis. Persisting deep divisions over Arafat's role, the Iranian-Iraqi war and restoration of Arab ties with Egypt make its convening ever more difficult.

Egypt, on the other hand, as Heikal predicted, seems poised to return to the Arab world and ready to do battle with Syria for its leadership.

The Saudis, meanwhile, have clearly retreated to the diplomatic sidelines of this impending Arab-world struggle, tending instead to their own domestic affairs and the more immediate threat to the kingdom posed by the Iranian revolution across the gulf.

Despite this tactical retreat into its Arabian Peninsula shell, Saudi Arabia is far from losing all its power on the world scene. Even as its oil-based diplomatic clout wanes, the kingdom is breaking into the western petrochemical market with potentially as much leverage over prices and the industry as it once had over oil.

This new Saudi petrochemical industry, just becoming operational, is one of the many results of the billions of dollars plowed into development here since the onset of the oil boom in 1973.

In addition, the Saudis continue to believe that a renewed shortage of oil worldwide toward the end of this century will restore their influence and wealth to what they were at their peak in the late 1970s.

What this passing golden age has done to Saudi Arabia and how it has affected this conservative kingdom and changed Saudi society are the topics of this three-part series. It is written on the basis of a half dozen visits over the past six years, the most recent for three weeks starting in mid-October and involving thousands of miles of travel throughout the country.

In the past 15 years, the Saudi government has invested $400 billion in three successive development plans. Such spending has resulted in the paving over of big swaths of the Arabian desert with sprawling cities and a network of superhighways, and in the construction of thousands of huge and costly skyscrapers, public buildings, factories and farms.

It has also radically changed the very nature of the kingdom from a rural-based society of tribes and nomads to an urban-centered one oriented around enterprising families, many of whom have built enormous fortunes hand-in-hand with the royal family.

Today, Saudi Arabia is going through another wrenching experience as it seeks to adapt to the sudden drop in income and deal with the strains of an entire society coming down off the high of a decade of boom.

While Saudi Arabia's involvement in outside affairs has long oscillated, there has been a noticeable swing in its official behavior during the past two years, from supreme self-confidence to extreme uncertainty and from remarkable self-assertiveness to marked timidity.

The outward signs of this unease include a government decision a year ago to stop publishing monthly export figures, apparently to conceal the extent of falling oil production.

No outsider seems to know with certainty any more how much oil Saudi Arabia is producing, or how much the government is spending or has to spend. Barter deals involving oil for goods, once anathema to Saudi economic policy, are now taking place.

Cabinet ministers are less willing to talk for the record to visiting reporters and are extremely circumspect when they do.

The contrast of today's mood with that of a few years ago is striking. In early 1981, Saudi Arabia was just assuming leadership of the 45-nation Islamic Conference Organization, and there was heady talk of turning it into a new Third World force rivaling the left-leaning Nonaligned Movement.

That May, Saudi Arabia achieved a longstanding goal of uniting the conservative emirates and sheikdoms of the Arabian Peninsula in the Gulf Cooperation Council with headquarters in Riyadh, the Saudi capital.

That July, the Saudis played an instrumental role, with former U.S. presidential envoy Philip C. Habib, in engineering a cease-fire in southern Lebanon between Israel and the PLO that lasted nearly a year.

A month later, King Fahd, who was then crown prince, startled the Arab world and the West by taking an uncharacteristically bold Saudi initiative to solve the Palestinian issue. His plan became the basis 13 months later at an Arab League summit conference in Fez, Morocco, for the first set of common proposals ever adopted by the league for peace with Israel, including implicit Arab recognition of the Jewish state.

Having achieved its goal of establishing an Arab consensus on this highly divisive issue, Saudi Arabia's prestige and political influence seemed at an all-time high.

But it proved to be a fleeting moment of glory for the Saudis on the ever-shifting sands of Arab politics. Nothing came of Fahd's plan. Israel rejected it out of hand; Washington simply ignored it, and the Saudis did not know what to do with it.

Nor did the Islamic Conference turn out to be a dynamic new Third World force under Saudi leadership. Rather, it was paralyzed by the divisive war between Iran and Iraq, both Islamic nations, and its attempts to mediate a peace failed.

The only lasting success of Saudi Arabia's activist diplomacy of the 1981-82 period was the Gulf Cooperation Council. Against most expectations, it became a reality and a kind of collective defensive shield for the six conservative Arab gulf states -- Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates -- against the outside world.

In retrospect, it was not just a glutted oil market that caused the eclipse of Saudi power in the world and in the Arab arena and prompted the Saudi retreat. Rather, a complex set of circumstances, domestic and foreign, trapped Fahd from the time of his assumption of power in June 1982 upon the sudden death of King Khalid. That month Israel invaded Lebanon, exposing the political and military weakness of the entire Arab world, despite its oil wealth.

Perhaps the most important cause, and no doubt the least understood in the West, was the religious and political challenge from Iran's expansionary, fundamentalist Shiite Moslem revolution, not only to Iraq but to all the Sunni Moslem rulers on the Arab side of the gulf.

This was particularly true for the House of Saud, of the strict Wahhabi sect, whose special need for religious legitimacy as keepers of Islam's holiest sites in Mecca and Medina made it extremely vulnerable to Iranian accusations of corrupt and impious royal rule.

At first, the gulf's conservative Sunni rulers thought Iraq's military power could keep Iran's revolution from washing across the gulf to their shores.

But the shock waves from Iran set off a powerful grass-roots religious revival all across the gulf, among Sunnis as well as Shiites.

This, plus the discovery in December 1981 of an Iranian-backed plot to overthrow the ruling Khalifa family of Bahrain and set up an Iranian-style Islamic republic there, awoke all the Persian Gulf's Sunni rulers to the dangers posed by Ayatollah Ruhollah Khomeini's revolution.

Sunnis are only a small minority of the gulf's 61 million indigenous people, while the Shiites account for more than 75 percent. In Bahrain, Shiites make up 70 percent of the population and in Iraq 60 percent.

The seriousness of the Iranian threat to the gulf's Sunni rulers was brought home again last Dec. 12 when seven bomb explosions rocked Kuwait's capital, damaging the U.S. and French embassies and the airport, killing five persons and injuring more than 80.

Last spring, Saudi and Kuwaiti tankers were among a score of ships hit by Iranian warplanes in retaliation for Iraqi raids on Iran-bound vessels. The Saudis finally took what for them was a monumental risk of confrontation with Iran by shooting down two Iranian warplanes.

These events collectively have turned Saudi attention to security in and around the kingdom and kept it riveted there. The building of a credible military deterrent to the Iranian threat has become a top priority.

Saudi Arabia has chosen the framework of the new Gulf Cooperation Council as the mechanism for doing this, hoping to prevent any of its Sunni allies from falling, while protecting itself.

Under these immediate religious, military and political pressures from Iran, there is little wonder that the Saudi leadership has retreated into the confines of the vast Arabian desert and reduced its risk-taking in the Arab world.

Western analysts point out that this new "low profile" may in fact be more in keeping with the traditional Saudi role of mediating quietly behind the scenes, avoiding risks and staying out of the limelight of fractious Arab politics.

In retrospect, they say, the brief period of Saudi diplomatic activism in the early 1980s may prove to have been a short-lived aberration not likely to be repeated for many years.

Next: A changing economy