In the early 1980s, there was an academic tendency to explain the structure of the oil market by focusing on the role of Saudi Arabia as a swing producer, explained by the dominant firm model. In comparison with the situation of the world oil market in the 1970s, the soft market situation in the 1980s encouraged OPEC to introduce output sharing among members in 1982. Although the possibility of the breakdown of OPEC was very high with the wide spread cheating among OPEC members in this period, no such result happened. The dominant firm model, which focuses on the role of Saudi Arabia as a swing producer, was a useful tool to explain why OPEC did not collapse on the contrary to the anticipation of the classical cartel model. However, this economic model does not explain why Saudi Arabia tried to achieve relatively high oil prices at the huge expense of their own market share and oil revenues, which did not coincide with their economic interests. As James Griffin and David Teece mentioned, “the dominant producer must adopt a lower discount rate, reducing its current price to a level at which new entry and the expansion of fringe members are discouraged.” Under the situation of the increasing market share of non-OPEC in the 1980s, Saudi Arabia paradoxically tried to achieve the target price of around $28 per barrel, although this target price was relatively high in this period in comparison with the period between1974-78. Although the stability of oil price in this period was largely attributed to Saudi Arabian role of a swing producer, the main reasons of its activity were little discussed. Robert Mabro tried to understand this unique situation by phrasing “OPEC is Saudi Arabia.” However, this phrase has limitations to explain why Saudi Arabia suddenly gave up its role of a swing producer in 1985, although the Kingdom knew that this decision would severely threaten the existence of OPEC. On the contrary to the arguments of economists, my research will work under the assumption that the political circumstance in the early 1980s, which severely threatened the security of Saudi regime in the regional level, was a major motivation for the Saudis to play a swing producer role during this period. I will demonstrate how Saudi Arabia capitalized on this unique oil policy to get rid of the internal and external political risks in cautious and defensive ways.