Exxon, Chevron and BP 'Moral High Ground' on Russia Crushed by Downed Plane

NEW YORK (TheStreet) -- The Malaysia Airlines disaster last week crushed oil companies' moral high ground to do business with Russia.

U.S. intelligence said Russia is responsible for "creating the conditions" that led to the downed passenger flight, putting U.S. oil companies in a precarious spot as Western actors prepare to possibly levy more economic sanctions against the country.

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"It's going to be hard to keep a moral high ground in terms of doing business with Russia," Francisco Blanch, global head of commodities research at Bank of America-Merrill Lynch, said in an interview. "Which means that Russia's long-term supply profile five years down the line is going to look worse than we expected."

Exxon Mobil (XOM), Chevron (CVX) and BP (BP) are among the oil firms with projects in Russia that could be affected if the West levies more serious sanctions.

Violence between Ukraine and separatists escalated this year, concerning global energy actors that Russia may limit key natural gas exports to Europe.

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These tensions contributed to rising Brent crude oil prices, which Bank of America says will average about $109 a barrel in the second half of 2014. WTI crude oil -- which is a North American crude -- will dip to about $98 per barrel due to increasing supply and an end to the summer driving season, Blanch said.

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