New York's main contract, light sweet crude for delivery in July, fell 50 cents to 69.00 dollars per barrel in pit trading.

In London, Brent North Sea crude for August delivery shed 67 cents to 67.78 dollars per barrel in electronic deals. The July contract expired Thursday at the close.

Crude futures had rebounded by almost one dollar between Wednesday and Thursday, erasing much of the losses sustained during the previous eight days.

According to Kevin Norrish of Barclays Capital, there was "a positive response from Iranian President Ahmadinejad to the recent offer of incentives to curb Iran's nuclear programme".

Norrish added that the market was weakening as traders made adjustments to their positions ahead of the weekend.

Sucden analyst Sam Tilley remained cautious over Iran however.

"It seems clear that while these latest developments are positive, there is still along way to go before we reach any kind of solution to the issue," he said.

A top aide to Iran's supreme leader said Friday that Tehran will not stop enriching uranium as a precondition for entering nuclear talks with six world powers.

"It is a principle that the Islamic Republic of Iran will not retreat from (uranium) enrichment," said Ali Akbar Velayati, a top advisor on foreign affairs to supreme leader Ayatollah Ali Khamenei, in comments reported by the ISNA news agency.

However, he added: "We will study any proposal by the countries who are involved with our nuclear case."

Iran has made clear that the country is not prepared to stop enriching uranium as a precondition for entering talks with six world powers, including the United States, on a package of incentives aimed at encouraging Iran to forego highly sensitive nuclear work.