Oil fell around $3 on Friday, pressured by concerns over the financial market crisis after talks between US politicians on a bailout package stalled.
The $700 billion deal to rescue the faltering US financial system hit a wall on Thursday amid bickering between Democrats and Republicans.
US crude fell $2.97 to $105.05 a barrel, while London Brent crude traded down $2.53 to $102.07.
Oil prices have dropped from record highs over $147 a barrel struck in July as the economic crisis and high fuel costs hurt demand in the US and other developed economies.
Further pressure has come as investors - who flocked into oil and other commodities earlier this year as a hedge against inflation and the weak dollar - shift into safer havens.
Oil has found some support from supply disruptions in the US Gulf of Mexico, home to a quarter of US crude production, caused by Hurricane Ike. Shell Oil, the largest producer in the Gulf of Mexico, expects the bulk of its offshore fields back on line within two weeks.
The International Energy Agency said earlier this week it did not need to release emergency stocks to bolster supplies, even though nearly 60% of the region's output remained shut.
