By 1973, which country had become the swing producer for the world?

• A. United States
• B. Saudi Arabia
• C. Iran
• D. Canada

Answer: (B)

The idea being tested is what a swing producer does in the oil market: a country that can quickly change its oil output to balance world demand and influence prices, thanks to large spare capacity and low production costs. By 1973, Saudi Arabia had amassed the most spare capacity and could expand or cut its production relatively easily, allowing it to respond to market gaps and push prices in the desired direction. This gave Saudi Arabia the ability to stabilize or influence global supply, making it the natural swing producer. Other countries didn’t have the same combination of huge flexible capacity and readily available low-cost oil to steer world markets in the same way.