BP is warning that Russian sanctions might have an adverse effect on their bottom line not to mention the global economy as well. As Europe seems to be slipping back into deflation war worries continue to support oil and are widening the Brent/ WTI spread this morning. The spread is killing European refining margins and the US will continue to refine at a record pace as long as the spread and cheap shale oil continue to offer the US an advantage. This comes as the Organization for Economic Cooperation and Development reports that the annual rate of inflation was unchanged at 2.1% in June, but in the Group of 20 leading developed and developing economies it fell to 2.9% from 3.0% raising the specter of inflation and increasing the odds for some European stimulus.The AP reports that BP warned that further international sanctions on Russia could hurt its profits because of its stake in the country's oil giant, Rosneft. The company said any erosion of its relationship with Rosneft — which is majority controlled by the Russian state, with BP holding a 19.75 percent stake — could also adversely impact its reputation.The U.S. has already put sanctions on Rosneft’s president and prohibited the company from tapping U.S. markets to raise money. The European Union is this week also considering broadening its sanctions to prohibit state-owned companies from using European capital markets. "If further international sanctions are imposed on Rosneft or new sanctions are imposed on Russia or other Russian individuals or entities, this could have a material adverse impact on our relationship with and investment in Rosneft, our business and strategic objectives in Russia and our financial position and results of operations," the company said.More potential troubles for Rosneft emerged Monday when an international tribunal ordered Russia to pay $50 billion to Yukos shareholders. The court ruled Russia had used tax claims to take control of Yukos in 2003 and silence Khodorkovsky in retaliation for his support of political parties.”Russia also may miss out on the shale revolution as sanctions could make it illegal to share US technologies with the Russians and could set back the Russian oil industry by decades. Bring back those good old Soviet Union days, hey Vlad?The Houston Chronical is reporting that “an oil tanker parked roughly 60 miles off the coast of Galveston has the potential to ignite an international incident, if the oil on board is offloaded in the U.S., a Rice University professor said Monday. “If the oil doesn’t come in, then that’s something like a 3 on the scale. If the oil does come in, that’s more like a 7,” Richard Stoll, a political science professor at Rice University said. The issue is that the approximately $100 million worth of crude oil sitting on board the United Kalavrvta is Kurdish. The U.S. has maintained a policy to deal only directly with the Iraq’s central government, closing a deal with a Kurds, could be construed as undermining an ally, even an unreliable ally.” Reports that Tamlay Trading of the British Virgin Islands bought the oil! Stay Tuned!Gold(COMEX:GCQ4) and silver(COMEX:SIQ4) are rising on geopolitical tensions and palladium is leading the way. Russia is a major producer of palladium. On top of that Zondereinde mine in South Africa, the biggest platinum(NYMEX:PLU4) producing country, will be reduced by half following an accident. Russia is the top palladium(NYMEX:PAU4) supplier, with South Africa the next largest according to Bloomberg.