Here’s when high oil prices could really pinch
The global economy could start to feel the pinch from rising oil prices, says one research house that warns a further rise of $10 in crude could shave 0.2 to 0.3 percent off annual global economic growth.
Brent crude oil prices have risen about 9 percent from a low hit on June 24 to near $109 a barrel, as unrest in Egypt fueled worries that crucial oil supply routes could be disrupted and helped push prices up.
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Prices of West Texas Intermediate (WTI) crude have soared about 14 percent over the same period to about $106 on Tuesday. Last week WTI rose above $107 -- its highest level in more than a year.
Andrew Kenningham, senior economist at Capital Economics, says that although oil prices at current levels do not pose a big threat to global growth, the possibility of further increases was a key risk to the firm's forecast for a gradual economic recovery.
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"If there were a further significant rise in oil prices, this would undermine our forecast that global growth will accelerate steadily from around 3 percent this year to 3.5 percent in 2015," he said in a note.
"We reckon the net impact of a $10 rise in oil prices is probably to cut global growth by around 0.2-0.3 percentage points," he added.
Last week, the International Monetary Fund (IMF) cut its growth forecasts for 2013 and 2014 by two percentage points to 3.1 percent and 3.8 percent respectively, citing concerns over a slowdown in China and Brazil.
Kenningham said Brent crude was as a more accurate gauge of the economic impact of rising oil prices, and the fact that its rise has been less steep than WTI was encouraging.
"The price of Brent is not particularly high when viewed over a time horizon longer than the past three months. For example, it is still below its average level in the first quarter of the year. And it is lower than its average during both 2011 and 2012, which was around $112 per barrel," said Kenningham.
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Han Pin Hsi, global head of commodities research at Standard Chartered, said a $10 rise in the price of crude oil would dampen demand and in turn weigh on economic growth globally.
"Corporate profits and consumer demand would be impacted [by a $10 spike]," said Hsi, adding: "A $10 rise is not in our base case scenario."
Hsi said he expected WTI prices to average at $106 per barrel in the third quarter and Brent crude to average $110 per barrel – within current ranges.
—By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie