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The purpose of this paper is to promote a greater understanding of the implications of oil price changes on the equity investment climate in Russia. A dynamic bivariate exponential general autoregressive conditional heteroscedastic (EGARCH) analysis shows that global oil price returns have significant impact on Russian equity returns and volatility. At the same time, a dynamic correlation analysis highlights Russia's importance in the international geopolitical scene and its positioning as a reliable supplier of oil during times of turmoil in the Middle East. There are a number of challenges, however, that threaten to slow down the performance of the oil industry in Russia and compromise the country's future economic growth and stock market performance.

This paper measures the level by which global oil price returns influence the stock returns and volatility in the BRIC equity markets and observes the time-varying conditional correlation between BRIC equity returns and oil price returns. The study concludes that the level of impact of oil price returns on equity returns and volatility in the BRIC countries depends on the extent to which these countries are net importers or net exporters of oil. It also concludes that despite the aggressive economic growth of the BRIC countries in the past 25 years, the volatility of stock returns in these economies does not have a significant impact on the volatility of global oil price returns. Copyright 2009 The Authors. Journal compilation Blackwell Publishing Ltd.

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