The German government has said surging oil prices are on track to cut economic growth by about 0.25% this year.
Oil prices have hit a series of record highs this year
Economy Minister Wolfgang Clement said on Monday that the government expected growth of 1.8% this year, falling to 1.7% in 2005.
"We estimate that (high oil prices) have already dampened real growth this year by almost a quarter of a percentage point," he said.
Oil prices have soared this year because of tight global supplies.
On Monday, US light sweet crude hit a record high of $55.53 a barrel amid fears that a labour dispute would halt output in Norway, the world's third largest exporter.
Mr Clement added that if prices were to remain above $50 a barrel for a sustained period, growth in Germany and around the world would suffer.
But he said that provided oil prices fell back, he was confident that an export-led recovery in Germany would feed through to the domestic economy.
"The powerful impetus from foreign demand will increasingly feed into domestic demand within the forecast period, especially into investment," he said.
"The recovery will broaden as a result."
A separate report out on Monday said German business confidence remained stable.
The business climate index, calculated each month by the Ifo economic research institute in Munich, edged up 0.1 point to 95.3 points in October, outpacing expectations for a slight decline.
However, Ifo president Hans-Werner Sinn said the German economy was not growing fast enough to lower Germany's unemployment rate, currently running at more than 10%.
"The economy is still moving ahead, but the dynamic of earlier upswings is absent," he said.
"The outlook for employment is still poor."