Brent slid to $104.30 a barrel, down $2.28, while WTI fell $2.20 to $92.41, a 2.14% and 2.33% decline respectively, leaving global benchmarks uneven.
The dip coincided with US and Iranian negotiators in New York probing a phased exit from the war, a move that would see Tehran reopen the Strait of Hormuz in exchange for Washington lifting its economic blockade.
A senior Iranian official, speaking to Reuters on Friday, warned that the deal would not alter Tehran's stance on its nuclear programme, underscoring the limits of the talks.
Meanwhile, speculation that the United States might ban diesel exports has widened the spread between US crude futures and Brent, as markets anticipate a reduction in refinery throughput if diesel cannot be shipped abroad.
The spread has hit its highest level since May, with Brent premium over WTI rising for three consecutive days, while Houthi strikes on Saudi oil infrastructure threaten to cut output from the world’s largest exporter.
U.S. Treasury officials will announce their stance on diesel exports in a Friday briefing, a move that could tighten the market further and determine whether crude prices rebound.