Demand collapse threatens oil sector

2012-06-13 13:13

Vienna - Slower growth in developed countries is threatening to provoke a collapse in global oil demand, Venezuela's Energy Minister Rafael Ramirez said at the start of an oil conference here on Wednesday.

"The capitalist system is in a deep crisis," Ramirez told petroleum ministers and representatives from oil companies at the start of a two-day conference.

"Economic deceleration in developed countries... has turned a collapse in oil demand into a clear and present danger," he added.

Oil prices have plunged by 25% since March, hit by oversupply and demand concerns linked to the ongoing eurozone debt crisis and the deteriorating global economic outlook.

Ramirez's comments came ahead of a meeting of the Organisation of Petroleum Exporting Countries (Opec) on Thursday, which will discuss a possible change in oil output levels.

"A stable price over $100 (per barrel) represents the minimum necessary if resources in regions with difficult access are to be produced and brought on stream quickly enough," Ramirez added at the Vienna seminar, sponsored by Opec.

On Tuesday, Ramirez had called on the cartel's members in the oil-rich Gulf to slash their production to help keep crude prices above $100 per barrel, slamming them for over-production.

The Venezuelan also dismissed criticism over the oil industry dominance of Opec, whose 12 member nations pump one third of the world's crude supplies.

"Output response that has materialised outside of Opec has been of a limited and insignificant magnitude to keep pace with long term growth rates," he noted.

Meanwhile, governments and companies were preventing oil producers from receiving "fair and just remuneration" for producing natural resources "that belongs to them."

Ramirez also used this opportunity to slam sanctions imposed on Iran because of its controversial nuclear programme, as an EU oil embargo prepared to come into force on July 1.

"Sanctions, threats and even military aggression have become the main tool to settle international disputes, in particular those related to pretroleum," he said.