OPEC 45 more than that of Saudi light. At the end of 1980, the official prices of better quality North African and Iranian crudes ranged between 36 and 38 dollars per barrel; spot prices were as high as 40 dollars per barrel. However, a combination of increased production in non-OPEC countries, reduced consumption levels in the industrialised countries and the global recessionary trends made the 60 per cent price hike during 1980 impossible for the market to absorb. The relative price stability during 1979 and expectations of OPEC price hikes in 1980, led to the building up of record inventories in the industrialised countries by the end of 1979. During the first half of 1980, spot prices which, since 1978, had been higher than the official prices, declined. Further weakening of spot prices was halted by the start of hostilities between Iran and Iraq in September 1980. Prices recovered temporarily. By early 1981, as other OPEC countries raised production to compensate for the loss of Iranian and Iraqi oil, all the signs of a glut were evident. The premium for spot prices disappeared. OPEC tried to bolster their sagging prices by cutting back production. By the end of 1981, OPEC output of crude was down to 20 million barrels per day, as compared to 31 million barrels per day in 1979. Saudi light sailed along through 1979, with a spot price of 32 dollars per barrel—two dollars below the official price—while other crudes fell to 34 dollars per barrel. In March 1982, OPEC agreed on a 4 per cent cut-back in production to 17.5 million barrels per day and a 3 per cent cut in prices, which brought the highest priced crudes to 35.50 dollars per barrel. A temporary recovery raised the price of Saudi light from a low of 28.50 dollars per barrel on April 2, 1982, to just under 34 dollars per barrel on May 14, 1982. However, the recovery was shortlived. The spot price of Saudi light fell from 33 dollars per barrel on June 18 to 32 dollars per barrel on Jdly 2, 1982. Following the ill-fated OPEC meeting on July 10, prices have weakened further, Saudi light standing at between 31.5 and 31.7 dollars per barrel. But the volume of transactions is low as market expectations of further price weakening run high. The present state of the international petroleum market stems from the developments that have taken place in the industrialised world—the main export market—in the strategy of the oil multinationals, and in the changing economic situation internationally. The period after 1973 saw a flurry of exploratory activity, especially off-shore. The oil MNCs (multinational corporations), having lost their oil fields in the Middle East and elsewhere in the OPEC world, were rapidly bidding for the development of new sources. The massive profits that the oil companies had made in the earlier period permitted them to go in for huge increases in capital expenditure. Western governments—especially those of West Europe,