By Bill Wilson
BBC News business reporter
Judging by recent results from energy giants, oil really can be called black gold again.
The market has factored in a long-term view over Iraq risks
On Tuesday this week, BP announced that it made profits of more than $16.2bn (£8.7bn) during last year.
Last week, Shell announced record profits for a UK company, making $17.59bn in 2004 - helped by sky-high crude prices during an otherwise troubled year.
Earlier that week, US oil giant Exxon Mobil announced that it had made a record $25.3bn (£13.4bn) profit in 2004 as it benefited from the surge in crude oil prices.
ChevronTexaco recently said its fourth quarter profits had nearly doubled to $3.44bn, against the same period in 2003.
However, experts say it won't all be plain sailing for the oil giants in 2005, as geopolitical influences shift.
Oil prices in New York were $55.17 a barrel in October, helping the energy titans make massive profits.
"Obviously a great deal of these profits we are seeing have been due to a rise in energy prises, not just of oil, over the past year, " says Global Insight senior energy analyst Simon Wardell.
Global Insight expects prices to moderate during the year to $35-38 for a barrel of Brent, and to $38-41 for a barrel of West Texas Intermediate (WTI).
Mr Wardell attributes the start to rising energy prices to events during 2003, namely the war in Iraq and uncertainty in Venezuela.
"Last year, rising oil consumption in China, the US and India and an uncertain
political situation in the Middle East also compounded supply problems."
Increased tensions in Iran could push oil prices higher again, Mr Wardell points out, as could instability in producing countries such as Venezuela and Nigeria.
"We also don't know if we have reached the end of the Yukos saga, or if are going to see an end to the huge production in Russia year-on-year," Mr Wardell says.
Shell was in the news for the wrong reasons in 2004
"Another major development to watch will be whether Chinese national companies increasingly compete with the major US firms over resources."
Supply problems may gradually resolve themselves, but structural problems - such as a shortage of refining capacity - remain.
"Most oil is consumed in terms of gasoline of heating oil, and there is only so much refining capacity that oil can squeeze through: you get a bottleneck and that is going to keep prices high," says Mr Wardell.
ING Financial oil and gas equities analyst Angus McPhail agrees that oil price have been propped up by geopolitical risk and the lack of spare capacity within the global system.
He believes prices will fall in the second part of the year, and says firms must tackle the reserves issue.
"Historically, oil companies have not invested enough to sustain reserves, and this will be a challenge for them this year."
Reserves are a touchy subject at Shell, which has downgraded its reserves estimates by nearly a quarter from January 2004.
On Thursday, as had been feared, reserves estimates were restated again, being reduced by 1.4 billion barrels.
Investor anger at the 2004 reserves crisis had led to three senior executives being ousted and £82.7m in fines by US and UK regulators.
"The long-term benefit to Shell has been a shake-out of the management," says Mr McPhail.
"But we now have to see a line drawn under the reserves issue, if the firm and its management is to retain credibility."
And Jim Wood-Smith of Gerrard, who believes Shell has not been doing enough to find new oil, says the firm can now bring to an end what has been a "bad decade for the company".
In October, Shell made the historic decision to abolish its twin board arrangement mollify investors.
"This will lead to less confusion in the retail unit, but there is still confusion about the boardroom unit, about the future dividend, and when the new company will be formed," says Mr McPhail.
Shell has been engaged in a share buy-back - as has its rival BP, whose management, Mr McPhail says, "has credibility".
"Last year BP bought back $7.5bn in shares and that is reason enough to expect that to continue this year," says Mr McPhail.
The UK's biggest company saw production ramped up last year, largely through its Russian venture TNK-BP.
Mr McPhail says doubts surround the business climate in Russia and while BP can live with that doubt, the company will not be able to rely on growth in Russia alone.
"The key thing in terms of Shell and BP is cash yield, and BP will still be ahead of Shell."