"If we continue with the current price of $12 per barrel for a long time, economic growth would be affected," Mohammad bin Hamad bin Seif al-Rahmi said in remarks carried by the official Oman News Agency late on Tuesday.

He said low oil prices would deter plans by Gulf Arab oil producers to invest billions of dollars to develop their oil and gas industries, and would hence deprive consumer states of the opportunity to cash in on these investments.

"Most of these funds would go to consumer countries like the United States which provides heavy equipment," he said.

"If (our economic) growth declines and we reduce our budgets then we will stop buying from them and the economies of these countries would be affected as they lose many of the purchase orders," he added.

He said a price of $20 per barrel of crude was reasonable to producers and consumers and would avert the negative impact on economic growth.

"Stability in oil markets could be achieved if price was fixed at $20 per barrel. It is a reasonable price to producers and consumers alike," he said.

World oil prices sank to new 10-year lows on Tuesday as the end of the Iraq-UN impasse turned market focus back to a towering overhang of stocks.

Benchmark Brent blend January futures ended 29 cents down at $11.44 a barrel on London's International Petroleum Exchange, having earlier broken through a key support level at the 10-year low of $11.55 a barrel seen in August.

Rahmi said current market conditions would not deter his country's plans to expand its oil and gas sector.

"Our plans for expansion and growth are not related to current market conditions," he said, adding that Oman was implementing plans to lessen the effects of low oil prices on its economy.

The Gulf Arab state participated in previous rounds of production cuts this year which pledged to reduce supply to the market from Opec and non-Opec states by around three million bpd to stem a steep price slide.