On the first full trading day of the year, political rifts in the Middle East overshadowed market concerns in Asia to push crude oil prices higher on Monday.

Saudi ally Bahrain issued a statement Monday saying it was cutting ties with Iran because of its "blatant and dangerous intervention" in regional Arab countries. The Saudi Embassy in Tehran was attacked during the weekend after more than 40 people, including prominent Shiite cleric Nirm al-Nimr, were executed by the government in Riyadh.

Saudi Arabia started to the rush to censure Iran, though it too was criticized for an aggressive system of capital punishment.

Iran and Saudi Arabia, longtime rivals and members of the Organization of Petroleum Exporting Countries, have been at odds over oil production levels. Iran said OPEC should make room for future production that will come as a result of easing sanctions pressure, while Riyadh said it needed to keep output steady to satisfy future demand.

The price for Brent crude oil rallied 2.3 percent in early trading Monday to $38.18 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, gained 1.6 percent to start the day at $37.63 per barrel. WTI lost a briefly-held premium against Brent to start 2016, even as the first shipment of U.S. crude oil destined for export leaves port since a 40-year-old ban was lifted last year.

The spike in crude oil prices follows a historic down-day on the Chinese stock market. The benchmark Shanghai Composite index fell 7 percent to trigger an emergency shutdown for trading to start 2016.

Twin crashes on the Chinese stock market during summer 2015 were met by steep declines in crude oil prices.

Last week, Christine Lagarde, the managing director of the International Monetary Fund, told German newspaper Hadelsblatt the U.S. Federal Reserve decision to raise interest rates and the prospects of a slowing Chinese economy, created headwinds for 2016.

"Global growth will be disappointing and uneven in 2016," she said.