Impact of Middle East Crisis on Oil Prices and Market Values of Royal Dutch and Petrobras

Jan 25, 2026

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This analysis examines the effects of a sudden crisis in the Middle East that causes oil prices to soar from $80 to $160 per barrel. We consider how this price jump impacts the market values of two major oil companies: Royal Dutch and Petrobras. The analysis debates the potential outcomes of both companies' market values during this price surge and the subsequent reversion to $80 per barrel. Insights are provided on the relative increases in market capitalization for both companies during the crisis and after the crisis abates.

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Impact of Middle East Crisis on Oil Prices and Market Values of Royal Dutch and Petrobras

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Presentation Transcript

Real Options 2
Background..
Oil prices moving… Now assume that a crisis in the Middle East causes oil prices to jump from $80/barrel to $160/barrel tomorrow. What will happen to the market values of the two companies? • They will both go up by the same amount • Royal Dutch will go up more than Petrobras • Petrobras will go up more than Royal Dutch
And back again.. Assume that the crisis passes the day after tomorrow and that oil prices drop back to $ 80/barrel. What do you foresee happening to the market values of the two companies? • They will both revert back to the current market cap • They will both be worth more than the current market cap, but Royal Dutch will be worth more. • They will both be worth more than the current market cap, but Petrobras will be worth more.