My two month old son's penis looks like it is bleeding a bit. What may be the cause?

Skin irritation. Often, irritation from diapers can cause an infant to have inflammation or bleeding in or around the foreskin of the penis. If this is the cause, lining the front surface of the diaper with petroleum jelly can help. No antibiotic ointments are really necessary. I recommend seeing your pediatrician if the irritation and bleeding continues, or if the foreskin appears narrowed or cracked.