Following a five to three vote, the court ruled that the punitive damages awarded by a US Court of Appeals should be slashed to a maximum amount equal to the total relevant compensatory damages.
Reuters quoted Justice David Souter as saying the $US2.5 billion in punitive damages was excessive under federal maritime law, and should be cut to the amount of actual harm.
A federal jury in Alaska awarded $US5 billion in punitive damages in 1994. A federal judge later reduced the punitive damages to $US4.5 billion, and the appeals court further cut it to $US2.5 billion.
The 11 million gallon spill from the Valdez spread oil to more than 1600km of coastline, killed thousands of sea mammals and birds, and caused lingering damage to a variety of marine species.
"The Valdez oil spill was a tragic accident and one which the corporation deeply regrets," ExxonMobil chief executive Rex Tillerson said in a statement.
"We know this has been a very difficult time for everyone involved. We have worked hard over many years to address the impacts of the spill and to prevent such accidents from happening in our company again."
