At $16 a barrel oil is now cheaper than at any time since the end of 1973. In the early stages of that year's oil crisis -- adjusting for the past dozen years' inflation, much of it caused by oil -- Saudi Arabian oil sold for the current equivalent of about $11. Then, with the beginning of 1974, it began to soar. Now the oil revolution of the 1970s seems to have arrived at its Thermidor.

The immediate reason for this sudden drop is a reversal of policy by Saudi Arabia. Several years ago, to stabilize the OPEC price, the Saudis pledged to reduce their production as far as necessary to hold the market steady. But the Saudis, like most other people, underestimated both the extent to which world consumption would drop and that to which world production would rise. OPEC's last hope was an extremely cold winter in the Northern Hemisphere to drive up the demand for fuel. That hasn't happened, and for the oil producers, the winter is now over. With its production approaching the vanishing point, Saudi Arabia decided to change strategy, pump more oil and punish its competitors.

For consumers, cheap is a great deal better than expensive. But rapid changes in oil prices generate dangerous economic strains regardless of the direction. In the 1970s countries with oil to export seemed to their neighbors to be unimaginably lucky. Most of the countries that import oil went through long and unpleasant processes of austerity and adjustment, struggling to raise exports to pay their fuel bills. Their economies are now more resilient and better balanced than those of the countries that spent the past decade living well on their oil revenues.

Brazil, for all of its debts and inflation, is in better shape than Mexico. Standards of living have been consistently rising in India, an oil importer, while they are falling in Nigeria, an oil exporter. The British industrial economy never benefited as much from rising North Sea oil production as successive governments had hoped, and the oil revenues on which they counted are now sharply diminished.

The current fall in oil prices is not likely to be the end of the story. The high prices of 1981 were not stable, and there is no reason to suppose that the low prices of 1986 will be stable either. The Saudi strategy presumably assumes that low prices will generate rising demand and a sharp increase in imports in industrial countries such as the United States. If the industrial countries let that happen, they deserve the further misfortunes that will await them in the late 1980s. Never was the road to trouble better illuminated.