A Palestinian teenager died on Wednesday of a gunshot wound sustained a week ago during a confrontation with Israeli forces in the West Bank, hospital officials said.

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The officials at Ramallah Hospital said Ali Safi, 17, had been shot through the chest. Witnesses said soldiers had responded to stone-throwing at a protest against a barrier going up between a settlement and a refugee camp near Ramallah.

The Israeli military had no immediate comment.

Security forces near Ramallah (Archive photo: AFP)

The incident came amid rising tensions in the West Bank after Israel froze the transfer of funds to the Palestinians in a diplomatic dispute and also following this month's re-election of Israeli Prime Minister Benjamin Netanyahu.

Israel's withholding of tax revenues it collects for the Palestinians has crippled the Palestinian economy since January.

The Israeli military has said the move is fuelling violence in the West Bank and this month held a surprise training drill for its forces in the area.

Israel said it halted the funds in protest over the Palestinian Authority joining the International Criminal Court. When its membership takes effect on April 1, it can file war crimes charges against Israel.

The Palestinians are also smarting from the re-election of Netanyahu, a right-wing leader who campaigned on a row back of an earlier commitment to seek a two-state solution with the Palestinians.

US-brokered peace talks between the sides broke down last April. Since then Palestinian President Mahmoud Abbas has stepped up unilateral moves at the United Nations to achieve the goal of Palestinian statehood.