Fill in the blank with the correct option:-

The two friends appear to have fallen _____ over a minor issue.

out

The correct answer is Option (2) → out

The correct phrasal verb here is "fall out".

• Fall out (Phrasal Verb): Means to have a quarrel or argument with someone and stop being friends.

• The sentence describes two friends separating due to an argument ("over a minor issue"), which perfectly matches the meaning of "fallen out."