The crude oil market was in a state of backwardation throughout the year, with spot
supply constrained by such factors as the impact of US sanctions on Iranian and
crude exports. At the same time geopolitical concerns and the ongoing trade conflict
the US and China drove volatility in both prices and flows.
This was a favorable trading environment for the crude team, which had an excellent year expanding both volumes and profits. We extended our lead as the largest exporter of US crude, with flows growing further from August onwards, thanks to shipments through the Plains All American Cactus II pipeline linking the shale fields of the Permian Basin to a storage and loading terminal on the Gulf Coast. Access to this infrastructure gives us a unique and highly efficient means of channeling premium quality US crude oil to global markets. It means we can take full advantage of profitable arbitrage opportunities into Europe and Asia and build deeper client relationships with Asian refiners. At the same time, we maintained our long-term supply relationship in the Urals market and built Middle East crude volumes during the year. Overall, physical margins improved markedly over 2019.
With these favorable trends set to continue, and a very strong crude oil trading team, we are optimistic about performance in 2020. We expect US volume to continue to grow, demand for US light sweet crude to gain extra momentum from IMO 2020, and margins to continue to build.