Tupi is the biggest oil discovery for seven years and it should boost Petrobras, which discovered the giant field offshore of Rio de Janeiro, into the superleague of hydrocarbon giants.

The New York Stock Exchange doffed its cap to the Brazilian State oil company yesterday, adding 14 per cent to its value and in London, Petrobras’ partner, BG Group, gained 5 per cent but the real significance of this find is greater than money.

Tupi is a world class resource - its estimated reservoir of between 5 and 8 billion barrels is not just a pool of energy but a political weapon that Brazil’s government will exploit to its maximum potential.

The minimum estimate of Tupi’s recoverable barrels is equal to the entire remaining oil in the North Sea and Wood Mackenzie reckons production will be at least 1 million barrels per day. The consultancy sees Brazil as a major oil exporter by 2015 and the significance is not lost on its government. Brazil’s oil minister has withdrawn from a forthcoming auction of licences to international companies all acreage with similarities to the Tupi geology.

Brazil is about to become a petrostate and a country that is already flexing its muscles vigorously in world trade fora will raise its voice a little bit louder. Even as Petrobras was crowing over its discovery yesterday, Brazil joined forces with Canada to sue the US over its trade-distorting farm subsidies. This time the US will have no choice but to listen. America needs more oil and Brazil is a friendly neighbour, sort of.

Brazil is the principal opponent of America and Europe at the World Trade Organisation, leading the attack by the emerging market nations against rich nation farm subsidies and quotas. Brazil has won cases against the EU over sugar quotas and against the US over cotton subsidies. It’s latest campaign is to bring down America’s tax on imported ethanol, used as a biofuel additive in petrol. The Tupi discovery will add a powerful lever to Brazil’s argument that America must open its doors to a clutch of ambitious Brazilian industrialists who want to turn Brazil’s sugar cane plantations into an ethanol factory for export to the US.

Brazil will soon have lots of friends; Chinese oil ministry officials will already be booking flights to Rio. But Brazil is no African republic, eager for a quick deal. Customers for Tupi’s barrels might be expected to offer something more than a wad of cash.

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