By Liam Moloney and Carlo Renda

ROME--Italy's refinery capacity is currently between 20% and 25% more than is needed as demand remains weak, said the head of the country's oil association, Unione Petrolifera, Monday.

"Today's situation is much worse [than the past]" as consumption stagnates and "forecasts aren't encouraging," said Pasquale De Vita, chairman of the association, at the shareholders' annual meeting in Rome.

"There's the risk that the crisis in the sector may lead to the closure of some refineries but that doesn't include us," said Chief Executive Massimo Moratti of Saras SpA (SRS.MI).

Italy's service station network needs to shut about 33% of the pumps to reduce them to between 15,000 and 18,000, and to make it "adequate" for the country's needs and lower prices for drivers thanks to efficiencies, Mr. De Vita also said.

Write to Liam Moloney and Carlo Renda, MF-DJ, at liam.moloney@dowjones.com

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