Could help be on the way for the beleaguered Alberta oil sands, which are set to increase output this year by 200,000 barrels per day (bbl/d)? With a persistent glut in global inventories and prices that can’t maintain traction over $50, oil sands producers may be worrying about what to do with extra oil.

But as the Trump Administration fires another warning shot across the bow of Venezuela, which competes with Canada in the U.S. Gulf Coast (USGC) market, Canada may be a beneficiary, especially if the U.S. imposes further sanctions.

The U.S. Treasury Department has slapped sanctions on Venezuelan President Nicholas Maduro, who on July 30 replaced the National Assembly with a “constituent assembly” that U.S. President Donald Trump says is a precursor to dictatorship. Maduro’s assets in the U.S. jurisdiction are frozen and American citizens are prohibited from doing business with him, according to a U.S. Treasury statement.

Venezuela is already in serious trouble. Its economy is on the verge of collapse and its national oil industry is unable to pay its debts to foreign service companies, which have already taken hundreds of millions in write-downs. State-owned oil company PDVSA depends on those write-downs.

The country also owes $55 billion to key allies Russia and China but is months behind on its oil-for-loans payments.

One of the options to punish Maduro considered by the White House is an outright ban on the 700,000 to 800,000 bbl/d of oil imported by Gulf Coast refineries. However, administration officials worry that an oil ban would push Venezuela into complete economic chaos and worsen the already serious humanitarian crisis as well as damage American service companies.

Nonetheless, the U.S. Treasury left no doubt that further sanctions are likely, even as Maduro mocked the U.S. for trying to force him to relent on the constituent assembly.

Venezuelan “crude oil is predominantly of similar quality as Canadian heavy oil and competes for refining space in the USGC,” said Kevin Birn, oil sands dialogue director at IHS MarkIt. “Refiners that have made significant investments to consume heavy oil will seek to consume those crudes to maximize their profits—any contraction in Venezuelan supply could catch those facilities out and hinder their operations.”

University of Houston energy economist Ed Hirs said in an email that the bulk of Venezuelan oil is most likely shipped to the two Gulf Coast refineries owned by CITGO, which is owned by Venezuela and mortgaged to Russian oil companies.

“The sanctions will stop that oil from coming into the U.S. and likely cause a bit of a headache for Venezuela and CITGO as the supply stream changes.  CITGO may have to pay real cash for its new source of supply,” he said.

Hirs thinks traders in the physical market will most likely execute swaps, which will cost Venezuela additional margin, but save the financially troubled country from having to pay cash.

“Of course, the crude from Canada can be a substitute for the Venezuelan crude at CITGO as are the various heavy crudes available from Saudi Arabia and other producers. It will all work down to price.”

Robert Skinner, an energy economist at the University of Calgary’s School of Public Policy, said Venezuela sanctions would be a positive for Canadian heavy oil grades Western Canada Select and Synthetic Crude Oil.

“But how long before the market adjusts? For example, Asian buyers take discounted Venezuelan grades to the detriment of other Latin American heavies, which then chase buyers in [the] USGC,” he asked. “How do we isolate the direct effects of a threatened boycott vs. what’s going on in the current product markets, seasonal effects and the general uptick in demand?”

Even if the global heavy crude oil market eventually adjusts to American sanctions against Venezuela, Canadian heavy crude oil is already making further inroads into the Gulf Coast market, where it traditionally makes up about 10% of heavy crude supply.

“We’ve been seeing a structural change [in the market] since OPEC cut medium sours, and Canadian heavy fits beautifully in there,” an oil sands company trader told Reuters. Western Canada Select usually trades at a $10 to $15 discount to West Texas Intermediate, but the differential has been narrowing lately and is now under $5.

While Mexican Maya has continued its slow decline and heavy crude output has fallen in Colombia, Alberta oil sands producers have been busy driving down costs, optimizing operations and adopting new technologies that promise to reduce costs by as much as 40%, according to IHS Markit’s Birn.

“If you have a paid for asset in the oil sands, we think that it’s somewhere between $30 to $40 barrel on a cash cost basis. The majors are at the bottom-end of that scale. And that’s fair to compare against other players globally because of the lack of production decline in the oil sands,” he said.

The Alberta oil industry is still constrained by a pipeline system operating at capacity or near it, which means shippers must use more expensive rail to get additional product to the Gulf Coast. Still, if the oil sands continue to become more competitive and Venezuela’s Maduro finally forces the Trump Administration’s hand, Canada is in an ideal position to vacate that any free market space.