LONDON: Oil was little changed on Friday and heading for a weekly gain, as Middle East tensions and oil output disruptions caused by cold weather in the U.S., the world’s biggest producer, balanced concerns about the health of the Chinese and global economies.

Pakistan launched strikes on separatist militants inside Iran on Thursday in a retaliatory attack, while the U.S. launched new strikes against Houthi anti-ship missiles aimed at the Red Sea.

Brent crude futures fell 19 cents, or 0.2%, to $78.91 a barrel by 1202 GMT, while U.S. West Texas Intermediate crude futures (WTI) were up 1 cent at $74.49.

“While the price of crude remains sensitive to events in the Middle East, as we’ve seen over the last couple of weeks, the oil market remains well balanced,” said Craig Erlam, analyst at brokerage OANDA.

“Supply disruptions remain an upside risk but there are downside risks too, including the global economy.”

Oil prices rise on global demand forecasts

For the week, the U.S. benchmark is on track to rise about 2% while Brent is set to gain less than 1%. Both markers climbed on Thursday after the International Energy Agency (IEA) raised its 2024 oil demand growth forecast.

“As tensions in the Middle East are spreading, traders don’t want to take short positions, but they are also cautious about continuing to build long positions as China’s economic recovery remains slow,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

Despite its higher demand growth forecast, the IEA’s projection is half that of producer group OPEC. The Paris-based agency also said that - barring significant disruptions to flows - the market looked reasonably well supplied in 2024.

While the Middle East tensions have not shut down any oil production, supply outages continue in Libya and about 40% of oil output in North Dakota, a top producing U.S. state, remained shut due to extreme cold as of Wednesday.