Nick Fountain

To show their disapproval, they did two things.

One, they said, none of our oil is going to go to the supporters of Israel, especially the U.S.

This became known as the Arab oil embargo.

And this was not OPEC, by the way.

It was a smaller group.

But the second thing they did, and the more important, was to limit the amount of oil they even pumped out of the ground.

And that is because the U.S.

wasn't only buying oil from this group of countries.

So even with the embargo, they could get the global market rate for oil elsewhere.

If these countries really wanted to put pressure on the U.S.

and these other countries, they needed to reduce the total amount of oil in circulation.

So they said they were going to cut production 5% every month as long as the war continued.

Now, as we mentioned, the embargo and production cuts wasn't an OPEC policy.

It was just some countries.

But OPEC members learned a lesson from it.

Their power was not in expressing their grievances or trying to negotiate.

They could control the market by banding together and limiting supply.

At this point, OPEC countries were producing more than half of the world's oil.

So the answer to listener Valerie's question about why and how OPEC controls prices comes from that insight.

That their power lies in collectively controlling supply.