It is quarterly earnings season and the latest figures are in. The world’s major oil companies posted mixed results. Some were good, some were bad, some showed signs of short-term optimism, but several have once again hinted at some worrying underlying trends that could play out over the long-term.
First, BP (NYSE: BP) saw its profits increase by more than 65 percent from a year earlier, a highly impressive number. The British oil giant posted over $3.37 billion in second quarter profits, up from $2.04 billion in the second quarter of 2013. The gains came largely from its 19.75 percent stake in the Russian oil company Rosneft, which is owned by the state but is the largest publicly traded oil firm in the world by production.
While BP’s assets in Russia paid off over the past year, Rosneft is suddenly in the crosshairs of the western world, with the United States and the European Union enacting strong sanctions targeting Rosneft’s access to long-term finance as well as high-tech equipment needed for offshore drilling. Rosneft’s stock price dropped after the sanctions were announced in late July, and while its production may not be affected in the short-term, it may face difficulty acquiring technology that could block investment in new projects, thus cutting into the company’s long-term production capability.
“In Russia, recent geopolitical events have continued to create levels of uncertainty,” BP’s CEO Bob…