Oil prices settled higher Friday, notching a weekly gain as rising Middle East tensions continued to fuel jitters about potential supply disruptions at time when concerns about the demand outlook remain elevated.    

At 14:30 ET (19.30 GMT), West Texas Intermediate crude futures rose 1.5% to $79.19 per barrel, while Brent oil futures expiring in April rose 0.6% to $83.35 a barrel.

Middle East tensions continue to offer support

Concerns about a broader conflict in the Middle East, which accounts for a third of global oil output, remained front and center as Israel continued its offensive in Rafa, the southern City of Gaza, while Hezbollah chief Hassan Nasrallah vowed to escalate its battle with Israel.

Fresh concerns about supply disruptions in the region helped push sentiment on oil prices higher and offset jitters about a higher for longer interest rate environment in the U.S. denting economic growth.  

The U.S. producer price index (PPI) increased 0.3% last month following a revised decline of 0.1% in December, Labor Department figures showed on Friday. Economists had predicted a rise of 0.1%.

"The latest hotter-than-expected producer price report comes on the heels of a notably hotter consumer price report earlier this week," Stifel said in a note, as the odds of May cut dropped to 35% from 53% last week. 

Both the U.K. and Japan entered a technical recession in the fourth quarter of 2023, GDP data showed on Thursday.

The jitters about global growth come a the IEA reported earlier this week said that global oil demand was slowing.

The organization trimmed its 2024 global oil growth forecast to 1.22 million barrels per day (bpd) from 1.24 million bpd. 

The agency also forecast higher supplies in 2024 amid record-high U.S. production and reluctance among members of the Organization of the Petroleum Exporting Countries to enact deeper supply cuts. The IEA expects supply to grow by 1.7 million bpd in 2024, up from its prior outlook of 1.5 million bpd.