The charity said in a briefing that the world produces enough food for its 7 billion people, but hunger persists because the global food system is "fatally flawed".
Oxfam urged this weekend's global hunger meeting in London, convened by British Prime Minister David Cameron, to kick start reforms that tackle the "scandal" of the world's 900 million or so hungry people.
"For millions of people who are currently struggling to get by, rising food prices could spell disaster," Max Lawson, Oxfam's head of policy, said in a statement. "We need urgent action to help the worst-affected countries build their food reserves and put in place social safety-nets to enable people to weather this storm."
The aid agency singled out restive Yemen as a particularly vulnerable country, because it is heavily dependent on food imports, including 90 percent of its wheat. With 10 million Yemenis already going hungry and 267,000 children at risk of death from malnutrition, families are resorting to extreme ways of coping, such as marrying off young daughters to cut the number of mouths to feed, Oxfam said.
Rising global food prices could pile more pressure on an overstretched humanitarian system, which is already struggling to cope with food crises in the Sahel region of West Africa, Sudan, South Sudan, Somalia, Democratic Republic of Congo, Afghanistan, Kenya, Zimbabwe and Yemen, it added.
The United States' worst drought in six decades has severely damaged corn and soy crops, and both dry spells and floods in Central Asia threaten wheat harvests in Russia and Kazakhstan, and maize in Ukraine, hiking futures prices for those food commodities on international markets by between 30 and 50 percent, Oxfam said.
On Thursday, the U.N. Food and Agriculture Organization (FAO) said its food price index climbed 6 percent in July after three months of decline, driven by a surge in grain and sugar prices. Maize jumped by almost 23 percent in July and wheat 19 percent.
Oxfam noted in its briefing that meat, milk and egg prices are likely to rise in developing countries, because soy and corn are important animal feed stocks. Poor people in Mexico and Central America, where maize is a staple food, could be affected, and bread will become more expensive in North Africa because wheat prices tend to follow maize prices, it predicted.
But as rising global prices can take months to filter through to people's daily lives, it is still too early to know exactly how the latest increases will play out, Oxfam said. One difference from the last major food price crisis of 2007-2008 is that fuel costs and rice prices are lower, it added.
Much will depend on how policy makers - especially those in G20 countries - react, the charity said.
The briefing listed actions that could be taken to prevent the world's hunger situation getting worse.
"We must stop the obscene waste of food, including burning it as biodiesel in our trucks and cars," Oxfam recommended. The call to reduce the use of food crops for biofuels echoes recent proposals by other experts, including the head of the International Food Policy Research Institute.
Oxfam also said the world must tackle climate change, land-grabs and speculation. "We must build up our food stocks and kick-start good investment again in smallholder farmers and in resilient, sustainable agriculture," it urged.
Last week, Britain's Department for International Development (DFID) said the London hunger event on August 12 - the closing day of the Olympic Games - will challenge global leaders to step up efforts to improve nutrition and reduce the rate of stunting among the world’s poorest children by the next Olympics in 2016. The event is being co-hosted by Michel Temer, vice president of Brazil, where the next Games take place.
The London conference will identify pioneering ways to tackle malnutrition and bring in new champions to support the global "Scaling up Nutrition" (SUN) movement, DFID said on its website.
A new global target to reduce the number of stunted children by 40 percent, or 70 million, by 2025 has been agreed by the World Health Assembly, it noted.
Charity Save the Children said last month that more children survived past their fifth birthday and attended school at the end of the 2000s than a decade before, but a rise in acute malnutrition could undermine those unprecedented gains.
"Hunger claims the lives of 300 children every hour. The Olympic (hunger) summit offers real hope that this could change," the agency's chief executive Justin Forsyth said in a statement ahead of the event.
"It won't end the growing crisis right away - but if it can agree a target to reduce child malnutrition and set out a clear ambition for 2013 - when Britain hosts the G8 - it could be the most impressive Olympic legacy ever."