Could Brazil Take No. 1?

Petrobras, the Brazilian oil giant formerly derided as "Petrosaurus," could become the world's most valuable company, based on its stock price. That startling forecast, made recently by mutual-fund maestro Ken Heebner, speaks volumes about how fast Petrobras, Brazil and world markets are changing.

Oil companies are blowing past technology titans like General Electric and Microsoft to claim five of the top 10 spots in rankings of the world's largest companies. For a dizzying moment after its IPO last fall, PetroChina's market cap topped $1 trillion, or twice as much as the next two corporations—GE and ExxonMobil—combined. But that's not where the future lies. Oil companies are split between efficient private firms with waning access (ExxonMobil) and inept state enterprises with favored rights to local fields (PetroChina). The few well-run state firms, like Norway's Statoil, tend to be short on future reserves, too.

In recent years, Brazil has streamlined into a darling of emerging-market investors, and so has Petrobras. It's now perhaps the lone example of a competent state company with huge new reserves. The discovery of two vast new fields, the latest last month, drove up Petrobras's market cap to $296 billion, overtaking Microsoft as the world's sixth largest company. If oil prices keep rising, Petrobras is likely to follow.