Crude oil prices declined as the United States and Iran appeared set to continue negotiations; a recent escalation in attacks had pressured a ceasefire and hindered tanker traffic through the Strait of Hormuz.

WTI crude fell 0.9%, settling near $71 per barrel, though it still posted a weekly gain of around 4%. Brent futures also dropped, closing near $76 per barrel.

A U.S. official stated that technical-level talks were ongoing, following two consecutive days of U.S. military strikes on targets in Iran, which had cast a shadow over the negotiation prospects. Iran's semi-official Tasnim news agency reported that a Qatari delegation had arrived in Iran.

Oil prices experienced a knee-jerk reaction, briefly paring losses, after former U.S. President Donald Trump posted on social media that "unequivocally... the ceasefire is over!" However, prices subsequently turned lower again. He also confirmed that negotiations between the warring parties would continue.

In a report on Friday, the International Energy Agency warned that a renewed escalation of hostilities between the two adversaries could undermine efforts to rebuild global oil inventories later this year.

Energy supply from the region showed resilience. The United Arab Emirates boosted crude production to a record high last month, offering the strongest evidence yet that Abu Dhabi is acting more boldly in response to the conflict than any of its Persian Gulf neighbors.

"Overall, the price action suggests that the market believes hostilities will not last too long," said Scott Shelton, an energy specialist at TP ICAP Group Plc. "On the other hand, oil exports via the Strait of Hormuz are significantly lower than last week, while there are signs that China may be increasing refinery run rates."

"However, from a supply-demand balance perspective, the post-war outlook appears increasingly bleak," he added.

Visible traffic through the Strait of Hormuz has been significantly reduced due to the hostilities. Traders will be monitoring production and sales from Persian Gulf oil producers like Saudi Arabia. Saudi Arabia is expected to issue monthly quotas to customers soon.

Vessel-tracking data indicated that visible traffic through the Strait of Hormuz remained sparse on Friday after appearing nearly stalled on Thursday. At least two very large crude carriers controlled by the same company appeared to transit the waterway along a U.S.-escorted route on Friday.

In New York, WTI crude for August delivery fell 0.9% to settle at $71.41 per barrel.

Brent crude for September settlement declined 0.4%, closing at $76.01 per barrel.