FTSE 100 Live: Stocks to fall as oil prices near $100; Bailey warns inflation risk ‘on upside’

City AM’s FTSE 100 liveblog reports that the UK’s blue-chip index is expected to decline on Wednesday morning, based on IG futures. On Tuesday evening, Bank of England governor Andrew Bailey suggested that inflation risks remain higher than anticipated, as energy prices could increase further due to the ongoing blockade of the Strait of Hormuz.

Oil prices surged during Tuesday's late trading, reaching their highest level since July 23, with Brent crude reaching just under $98 per barrel. This escalation in prices was triggered by reports from Saudi Arabia's state-run press agency that Houthi militants had targeted several energy facilities, causing injuries. Dan Coatsworth, AJ Bell's head of markets, warned that the rising oil prices might spook global markets and increase concerns about higher interest rates persisting for a longer period, as central banks attempt to counter inflation.

He stated, "Investors should be alert rather than alarmed when oil trades above $90 per barrel. The market impact hinges on not only the oil price but also the reasons behind its rise and its duration." As economic growth figures are released later in the week, food industry leaders have warned that food inflation could reach four percent this year and exceed six percent by next summer, driven by escalating supply chain and energy costs stemming from the Strait of Hormuz closure.