Oil rose above $109 a barrel on Friday as rising tension over major oil exporter Iran and a report showing the U.S. economy created more jobs countered concern about the euro zone debt crisis.
The EU and U.S. tightened their sanctions against Iran on Thursday in response to mounting concern over Tehran's nuclear work, increasing concern over a possible disruption to oil flows from the second-largest OPEC producer.
"At the moment, it's a supportive factor and one of the issues that makes you think the market won't come off too far from here even if there is more economic doom and gloom all of a sudden."
Brent crude rose 45 cents to $109.44 a barrel by 1349 GMT, down from an intra-day peak of $110.41. U.S. crude climbed 40 cents to $100.60.
For the week, Brent is heading for a more than 2 percent gain. U.S. crude is poised for a rise of over 3 percent, its first weekly gain in three.
In a further sign the U.S. economic recovery was gaining momentum, employment growth picked up speed in November and the jobless rate dropped to a 2-1/2 year low of 8.6 percent.
Nonfarm payrolls increased 120,000 last month, the Labor Department said on Friday, in line with economists' expectations for a gain of 122,000.
On Thursday, the Institute for Supply Management said U.S. manufacturing activity rose to its highest in five months, following earlier data on consumer spending and private-sector job creation that were also positive.
"Data out of the U.S. has been strong and that has helped support oil prices. The market wants to move higher, but is reluctant to, unless it sees a clear resolution to the euro zone crisis," said Victor Say, analyst at Informa Global Markets in Singapore.
In Europe, whose sovereign debt problems have weighed on oil prices for months, the European Central Bank signalled on Thursday it stood ready to act more aggressively to fight the region's crisis if political leaders agree next week on much tighter budget controls.
With sanctions against Iran being tightened, the prospect of disruption to its oil supplies remained in focus, possibly as a pre-emptive move by Iran.
"The political process (to impose sanctions) will take time, but if Iran sees a loss of income as inevitable, there is a greater risk that it takes what limited political and economic capital it has to the negotiating table by invoking a pre-emptive export ban," analysts at JP Morgan said in a report.
While such a move was likely to trigger the release of strategic reserves, the initial market shock could boost prices by $20 to $30 a barrel, the report said.
Royal Dutch Shell said on Friday it would cease operations in Syria, a much smaller oil producer than Iran, to heed new European Union sanctions against Damascus. (Additional reporting by Francis Kan in Singapore; Editing by William Hardy)