(Bloomberg) -- The resumption of unimpeded Venezuelan oil exports after the US eased sanctions will mark the most significant shift in global crude flows in years.  

The Biden administration’s decision to relax sanctions appears likely to boost shipments of Venezuelan crude to the US and Europe while squeezing out some deliveries from Canada, Mexico and Colombia. It also means fewer cargoes from the Latin American nation making the long trek to China, currently the top destination for Venezuelan oil. 

Exports to the US are expected to swell from the current daily level of roughly 116,000 barrels to satiate Gulf Coast refineries specially designed to process the type of heavy, dense oil Venezuela produces. Before sweeping sanctions were imposed in 2019, the US imported an average of half-a-million barrels daily from the OPEC founding member and Venezuela was the primary source of oil for Gulf Coast fuel makers.

The sanctions relief comes at a time when global oil supplies have tightened, particularly for crude grades similar to heavy Venezuelan oil, after Saudia Arabia and its allies capped exports. The additional cargoes will also hit the water as margins for producing so-called distillates are on the rise. The premium for making diesel — which is especially plentiful in heavy crude — have widened to $44 a barrel relative to the price of the US crude benchmark, West Texas Intermediate.

“The scope of the sanctions easing package was surprisingly comprehensive, effectively lifting most restrictions on the oil sector,” said Fernando Ferreira, director of geopolitical risk at Rapidan Energy Advisors LLC. “The immediate impact should be an increase of crude oil exports from Venezuela to the US, and of US petroleum products, including diluents, to Venezuela.” Diluents are lightweight crude components mixed with heavy crude so it can flow on pipelines and into tanker ships.

The Biden administration late on Wednesday suspended sanctions on Venezuelan oil, natural gas and gold production. The measure, which came just short of undoing a de facto ban on US imports of oil from the nation, are temporary and depend on promises to hold free elections next year. 

US refiners appear eager to acquire more Venezuelan oil. After the Biden administration allowed Chevron Corp. to resume oil production in Venezuela late last year, several fuelmakers restarted purchases, including Valero Energy Corp., Phillips 66 and Marathon Petroleum Corp. The notable exception has been Citgo Petroleum, the US refining arm of state-controlled Petroleos de Venezuela SA, which was buying close to 180,000 barrels a day as recently as five years ago. 

Citgo declined to comment for this story. TotalEnergies SE and Saudi-owned Motiva Enterprises LLC, formerly active buyers of Venezuelan oil for their US refining operations, didn’t immediately respond to requests for comment. 

The challenge for Petroleos de Venezuela SA will be the declining quality of the oil it’s harvesting, according to traders who spoke on condition of anonymity. High water and salt content, which can damage steel pipes, limit the quantities some refiners can process. 

When the sanctions were imposed, Venezuelan oil was quickly replaced by heavy Canadian, Mexican and Colombian supplies that refiners, in turn, discovered were more stable and homogeneous than Venezuelan crude. 

US companies will still need to be careful and avoid doing business with ventures involving Russian entities, such as the Petromonagas project that’s part-owned by Roszarubezhneft. Petromonagas is currently producing 89,000 barrels a day of Merey 16 oil, mostly using diluents imported from Iran.