In their short joint statement, Mobil and Exxon said they could not guarantee a deal would be reached and declined further comment.
The talks are driven by a desire to boost profits by reducing expenses in a time of slumping oil markets -- but price hikes at the pump are unlikely, analysts said, because of the glut of oil on the market.
Oil industry analysts say the rationale for the deal is cost savings. Exxon, already No. 1, has little reason to simply get bigger, they said.
With a merger, Exxon would gain nothing strategically, in terms of access to crude oil reserves, that it could not have achieved on its own, analysts said.
"I am a bit skeptical about the whole thing. It has got to be about savings," said Schroder & Co. analyst Michael Mayer.
Alan Marshall, an energy analyst with Robert Fleming Securities in London, projected job cuts of up to 20,000 -- about 16 percent of the companies' combined work force. Most of the cuts would come in the United States, followed by Asia, he said.
The merger would intensify consolidation in the energy industry that has quickened since British Petroleum announced its surprising $49 billion takeover of Amoco Corp. in August. Oil stocks jumped Friday on confirmation of the Exxon-Mobil talks and anticipation of even more deals.
Chevron Corp., Texaco Inc., Unocal Corp. and Atlantic Richfield Co. are among the major players analysts named as likely merger partners.
Exxon, based in Irving, Texas, ranks only behind Royal Dutch-Shell among the world's oil companies. Mobil, based Fairfax, Va., is the second-largest U.S. oil and gas group after Exxon and the fourth-largest in the world.
The companies are children of Standard Oil Trust, John D. Rockefeller's oil monopoly that was broken up by the government in 1911.