FTSE 100 Live: Stocks drop as oil returns to near $100 after tankers attacked

Good morning and welcome back to the City AM liveblog.

The price of oil shot back above triple digits this morning, rising as much as nine per cent in Asian trading following the news two tankers were struck in the Gulf.

An Iraqi news agency broke the news that 38 crew members have been rescued from the vessels while one person has died.

It comes after Iran vowed to prevent “one litre of oil” leaving the region until the strikes from the US and Israel stop. The Israeli military said it had launched an “extensive” wave of air strikes targeting Tehran overnight.

The International Energy Agency (IEA) made an intervention yesterday to cap oil prices with the release of a record 400 million barrels from emergency oil reserves in a bid to contain spiking prices on Wednesday – but market reaction remained muted.

The IEA’s executive director Faith Birol said on Wednesday the market “challenges we are facing are unprecedented in scale”.

And yet Brent crude – the international bench mark for oil – barely reacted to the move, holding firm above the $90 mark. Meanwhile, the FTSE 100 swung back to a loss, shedding 0.5 per cent in the day’s session.

Analysts at investment bank Macquarie have said the ongoing tensions around the Strait of Hormuz could push the price of Brent crude to “$150 or higher”.

“The timeline for an extremely large oil price move is very short,” they said, adding that a few weeks of closure for the strait – which around a fifth of the world’s oil supply flows through – would trigger a “domino effect”.

“We are growing more confident that without an agreement and a fast cessation of all kinetic activity, the crude market will begin to break in days, and not in weeks or months,” analysts said.

We’ll be bringing you the latest FTSE 100 and market updates.

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