Taking part in the title race, however, is a distant dream for United at present.
The completion of Jim Ratcliffe’s minority stake in United this week and a spell of good form had brought hope of a fresh start for the Red Devils.
United had won their previous four Premier League games to rekindle hope of qualifying for next season’s Champions League, but a 2-1 defeat leaves them eight points adrift of Aston Villa.
Ratcliffe revealed his ambition to topple City and Liverpool at the top of the English game within three years.
But the work that lies ahead of the British billionaire on and off the field was exposed as Fulham dominated a ragged United for long spells.
Fulham finally took one of their chances midway through the second half when Calvin Bassey lashed home his first goal for the Cottagers from a corner.
United looked to have snatched a point against the run of play late on when Harry Maguire tapped in after Bernd Leno spilled Bruno Fernandes’ effort.
But there was another twist in the tale as Adama Traore left Maguire trailing in his wake before teeing up Iwobi to curl inside Andre Onana’s near post.
“We went for the win but by the end we let them slip away,” United boss Erik ten Hag said.
Foden saves City
City were again far from their flowing best but, just like in a 1-0 victory over Brentford in midweek, did enough to keep their title challenge on track.
The in-form Phil Foden scored the only goal at the Vitality Stadium as the England international stroked into an empty net for his 16th goal of the season after Neto parried Erling Haaland’s initial effort.
At the other end, Ederson was required to save City from dropping two costly points when he kept out Dominic Solanke’s header on the line by the finest of margins.
And Enes Unal was inches away from an equaliser when his header shaved the post in stoppage-time.
“They are supermen,” said City coach Pep Guardiola. “The demands for the calendar, for the expectations, they are so high.
“I don’t know how much longer we arrive in all competitions but still, we are there. Knowing where we come from, it’s unbelievable.”
Aston Villa opened up a five-point lead over Tottenham in the battle for a top-four finish with a 4-2 win over Nottingham Forest, who remain just four points above the relegation zone.
Oliver Glasner got off to a dream start as Crystal Palace manager after replacing Roy Hodgson with a 3-0 win over second bottom Burnley.
Everton were denied a huge win in their battle to beat the drop by Lewis Dunk’s 95th minute equaliser for Brighton in a 1-1 draw at the Amex.
© Agence France-Presse
Photo: twitter @OptaJoe