Exxon CEO: Oil Markets Are Well Supplied Despite Libya

Oil markets are "well supplied" despite the unrest in the Middle East and North Africa, the Chief Executive of Exxon Mobil Corp. (XOM) said Wednesday.

Speaking to reporters after the company's analyst meeting in New York, Chief Executive Rex Tillerson said crude prices, currently trading over $100 a barrel, could only reach the levels seen two and a half years ago over $145 a barrel if markets experience a more significant supply disruptions than the one caused by the political unrest in Libya. The current spike in prices is a short-term reaction to the geopolitical risks markets see in Libya rather than a fundamental unbalance between supply and demand, he said. He added that Exxon Mobil has not seen either destruction in oil demand and that consumers could start changing their behaviour only when gasoline prices hit $4 a barrel a gallon.

"If you have a physical supply disruption that is significant, something beyond Libya's volume, which was about 1.5% of global production, then certainly you would expect that there could be can a response in the price to that," Tillerson said. "I don't anticipate that happening."

The head of Exxon Mobil said the company has had no problem replacing the oil its Mediterranean refineries used from Libya with crude from other areas and that the company has not heard of any other buyer having problems either. "When we had to stop lifting that crude to comply with sanctions, we had no difficulty finding replacement crude volumes," Tillerson said. "Markets are well supplied."

Tillerson said he is not "losing sleep" over the security of oil supply or even over the company's own operations, but rather over what is happening to the people in Libya.

Separately, the executive said he strongly disagrees with the comments made Tuesday in Houston by Bob Dudley, the CEO of rival European oil company BP PLC (BP, BP.LN), who said that improving safety in deep water operations was an issue for the entire all industry.

"I think those comments are great disservice to these industry," Tillerson said. "This conclusion that this is a major problem for the industry is just wrong."

In a speech, the head of BP called for more collaboration among energy companies in different areas where they face increasing challenges, including their ability to respond more efficiently to large oil spills. Last year, a rig drilling for BP in the U.S. Gulf of Mexico exploded, killing 11 and unleashing the worst marine oil spill in history.

-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207; [e-mail]