High Oil Prices:The Last Thing Asia Needs Right Now

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Rising oil prices could deal another blow to Asia's economies, already grappling with a slowing Chinese economy, weak export growth and an outflow of foreign funds amid expectations for an unwinding of U.S. monetary stimulus.

"The problem is for emerging markets, which will be hit by high oil prices," Mark Matthews, head of research for Asia at Bank Julius Baer, told CNBC.

(Read More: Emerging Market Growth Hits Lowest Since Financial Crisis)

"They are already going through a hard time right now with the rising [government bond] yields in the U.S., so it [the high oil price] would be another pressure point for emerging markets," he added.

Emerging markets which include Asian countries such as India and Indonesia have seen heavy outflows of foreign cash in recent weeks amid fears that the Federal Reserve could start to take back some its monetary stimulus this year.

(Read More: Where Now for Oil? It All Depends on Egypt)

U.S. crude oil prices pushed decisively above the $100-a-barrel mark this week on concerns that political unrest in Egypt could disrupt the supply of oil from the Middle East. Brent crude oil prices, trading at $105.47 late on Thursday, meanwhile have risen almost 3 percent in the past week alone.

Asia is heavily dependent on oil and the latest data available from the U.S. Energy Information Administration show that seven of the 15 countries it lists as the world's top net oil importers are from the region.

They include China, Japan, India and South Korea. The Organization of the Petroleum Exporting Countries expects China to replace the U.S. as the world's top oil importer by 2014.

"A serious spike in oil prices does have negative implications for Asian economies that depend on oil imports and in particular I am thinking about Japan and South Korea," said David Mann, the head of regional research for Asia at Standard Chartered Bank.

(Read More: Growth Worries? Asia Should Hail That Oil Price Fall)

Economists said that while they were not looking at a significant spike in oil prices at this stage, the move in oil prices was worth keeping an eye on.

"Trade balances in Asia tend to swing with oil prices and most countries in the region are in surplus at the moment," said Tim Condon, head of research for Asia at ING Financial Markets. "Obviously we will all watch oil if it continues to head higher but that is the key – whether it heads higher."

Analysts added that a sustained rise would feed through to higher inflation across Asia and exacerbate current account deficits in countries such as India and Indonesia.

India's current account deficit narrowed to $18.1 billion in the first three months of the year compared with $32.6 billion in the final quarter of 2012, but some analysts say that the narrowing could be short-lived especially with the rupee weak.

(Read More: India's Current Account Good News May Be Fleeting)

"India is one that could be impacted. It stands out because it has already seen a widening out of its current account deficit and that was in the absence of a spike in oil," said Mann at Standard Chartered.

Analysts said the high oil prices could actually benefit Japan as it encourages the country to move more quickly back to nuclear energy as a source of power.

Since the 2011 earthquake and tsunami triggered a meltdown at the Fukushima Daiichi nuclear power plant, Japan has idled nuclear reactors and relied heavily on imported energy. Prime Minister Shinzo Abe has been pushing restart units that have been deemed safe.

(Read More: A Yen for Nuclear Energy: Japan's Power Conundrum)

"With Japan, ironically it's a good thing, because it [high oil prices] would encourage the Japanese to realize that they do need to come back to nuclear power," said Matthews at Bank Julius Baer.

- By CNBC's Dhara Ranasinghe; Follow her on Twitter: @DharaCNBC