- RIL lost around 30,000 crores in the first few minutes of trading on Tuesday due to a slump in the crude oil price which has fallen below zero.
Within the first few minutes of trading today, Indian investors lost around 30,000 crore within Reliance Industries (RIL) due to the crude oil price plunge. US crude oil prices have fallen below zero in value per barrel for the very first time in history, but it has returned to positive territory at $0.58 a barrel.
It is more bad news for the fortune of Mukesh Ambani has already oscillated in the last couple of weeks, and the oil price collapse does not benefit his Reliance Industries.
According to the Bloomberg Billionaires Index, Ambani’s net worth collapsed this year by 41 percent to $34.4 billion on March 19. Yet it also slowly recovered, as of April 20, to hit $45 billion as per index. However, according to Forbes, he lost his spot as one of the world’s top ten billionaires, to stand at 19th this year.
At the start of the year, Ambani was worth $58.6 billion.
Much of the impact on his wealth stems from the fact that Reliance Industries, his retail-to-refining-to-telecom company, derives three-fifths of its operating income from its oil sector. And his fortunes would be altered by the free-fall in oil and subsequent gas prices.
Crude oil prices turned negative Monday, as demand plunged, in a stunning step. West Texas Intermediate oil delivery for May shed more than 300 percent on the New York Mercantile Exchange to settle at $-37.63 per barrel.
The BBC claimed that what this means is that oil producers are paying buyers to take the product off their stocks amid concerns that storage capacity may run out in May.
With the COVID-19 triggered lockout limiting worldwide movement, demand for oil has all but dried up. At the New York Mercantile Exchange (NYMEX) in May, the US light crude West Texas Intermediate (WTI) closed at $35.34 per barrel from the last closing of $18.27 per barrel.
This is just the second part of the impact on Reliance Industries of crude oil prices. During the huge selling off caused by Coronavirus, the share price plunged as much as 39 percent between January 1 and March 23.
RIL stock has been trading above 1000 since mid-2018. Moreso, it added a whopping $2.49 trillion — highest market cap add-on — alone in 2019. Yet, in 2020, it could not hold on to prosperity.
RIL shares were trading at some 917 pieces on March 19.
Much of the share price decline of his RIL happened in March when he saw a sharp drop in oil prices that expected global recession. Though his telecommunications and retail business are going well, his oil refining business is directly linked to crude oil prices.
The fortunes of RIL have been tied to the results of an oil war between Saudi Arabia and Russia. Ambani was also expected to close this year’s $15 billion Saudi Aramco transaction by March 31. But investors are wary with a lockout in place, while media reports say that the deal may be closed.