A rally that’s sent oil prices to nearly 2½-year highs could trim global growth and contribute to inflation, if sustained. But while higher prices would be a symptom of a maturing economic cycle, they’re unlikely to presage a sharp slowdown, barring an unforeseen supply shock, said Gabriel Sterne, head of global macro research at Oxford Economics, in a Tuesday note. Oil futures were sharply lower Tuesday, but the U.S. benchmark, West Texas Intermediate crude CLZ7, -0.83% remains up more than 2% in the month to date and 3.4% in 2017. Brent LCOF8, -0.74% the global benchmark, is hanging on to a 0.8% November rise but is up 8.9% so far this year. Both grades last week hit highs last seen in June 2015, boosted by expectations major oil-producing countries will extend an agreement to restrain consumption and political and diplomatic turmoil in the Middle East. Oxford Economics examined what would happen if Brent remained at $65 a barrel for two years—$10 above the firm’s baseline expectation—and then returned to the baseline. The model suggested that, ”other things equal,” world gross domestic product would grow 2.6% in 2018 compared with the firm’s baseline of 2.8%, with the peak impact coming in the final quarter of 2019, knocking 0.3 percentage point off growth. It would also boost global inflation by 0.6 percentage point in the final quarter of 2018 (see chart below). via