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Oil falls, Saudi disappointed by Russia cut
LONDON, Nov 26 (Reuters) - Oil prices dropped on Monday after a Saudi official said Riyadh was disappointed by Russia's lukewarm response to OPEC's demands for contribution to a cut in world oil supplies next year.
London's Brent crude futures dropped 53 cents to $18.75 a barrel, extending Friday's 62-cent fall.
U.S. light crude futures, closed on Thursday and Friday for the Thanksgiving holiday, fell 13 cents to $18.83 a barrel.
Oil fell heavily late last week after independent producer Russia said it would trim by a meagre 50,000 barrels per day (bpd) in the fourth quarter and hold talks in early December about further cuts for January.
The market had expected bigger cuts from the world's second biggest producer following offers of fairly substantial reductions from Norway and Mexico, which also compete with OPEC on the world oil market.
A senior Saudi official at the weekend described Russia's offer as "too little," but said it was encouraging that Moscow would review the decision in December.
"Russia's latest decision to cut production and exports by 50,000 bpd has caused a kind of disappointment in the market...although it is better than the quantity previously proposed it is considered too little by all standards," said an adviser to Saudi Oil Minister Ali al-Naimi.
The Organisation of the Petroleum Exporting Countries agreed this month to slash cartel output by 1.5 million bpd from January 1 if major non-OPEC producers chop supplies by 500,000 bpd.
Mexico and Norway, both exporters outside of the cartel, have offered cuts of 100,000 bpd and between 100,000 and 200,000 bpd, respectively, contingent on OPEC and Russia restraints.
GLOBAL SLOWDOWN
OPEC, which has already lopped 3.5 million bpd from output limits this year, wants to slice production again to compensate for a drop in petroleum demand because of the worldwide economic slowdown.
Oil prices, which started the year around $25 a barrel and have traded over $30, slumped more than 25 percent following the mid-September attacks in the United States as road and air travel dropped sharply and the bleak economic picture turned even gloomier.
Also brewing is another standoff between Iraq and the United Nations over Baghdad's crude sales under the U.N. oil-for-food programme, which is due for renewal at the end of the month.
Iraq is angry over U.S. and British efforts to change the pricing of its U.N.-monitored crude sales to twice a month rather than on the monthly basis in place since the programme started in 1996.
Iraq's Foreign Minister Naji Sabri said on Sunday the country would throw out the oil-for-food arrangement with the U.N. if controversial changes to oil sales pricing were adopted.
"There will be no deal if the Iraqi government does not accept changes introduced on the oil-for-food agreement," Sabri told Reuters.
The 15-nation U.N. Security Council must approve a resolution to either extend the current programme or revamp it before November 30. Iraq, which is an OPEC member but not included in the cartel's quota system because of the sanctions, exports some two million bpd of oil.
Russia, which has a veto at the Council, opposed the Anglo-American plans when they were proposed in the summer.
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