Asian shares were mixed early Monday after Saudi Arabia cut diplomatic ties with Iran, prompting some investors to bet higher oil prices will benefit energy and other stocks while others worried about the effects of even more tensions in the Middle East. Japan's Nikkei 225 fell 1 percent after the yen rose to a two-month high, possibly hurting the country's exports, while Singapore's STI slipped 0.1 percent. The ASX 200 in resource-rich Australia rose 0.6 percent, while New Zealand's NZX 50 inched up 0.1 percent. 

On Thursday in the U.S., the last trading day of the week and 2015, the Dow Jones Industrial Average and S&P 500 both lost about 1 percent. The Dow was off 2.2 percent for the year, the S&P 500 0.7 percent, according to Reuters. Oil rose on Thursday but was down about a third for 2015, which dragged down energy companies and the companies and economies that supply them, and fueled speculation that some banks exposed to the sector could take losses.

On Sunday, Saudi Arabia cut ties with Iran and gave its diplomats 48 hours to leave the country, after Iranian leaders criticized Saudi Arabia's execution of cleric Sheikh Nimr al-Nimr for alleged terrorism and protesters stormed the Saudi Embassy in Tehran. Sheikh Nimr was a Shiite, the branch of Islam in control of Iran, and was an outspoken critic of the Saudi royal family. The other main branch, the Sunnis, dominate Saudi Arabia.

Brent, the global oil benchmark, rose 3 percent to $38.40 per barrel, according to Reuters.

“The Saudi situation is, geopolitically, not good news," said Kengo Suzuki, chief currency strategist at Mizuho Securities Co. in Tokyo, as reported by Bloomberg. “Still, if oil prices stop falling, that may underpin commodity-related currencies and stocks. So we’re watching whether markets will be dominated by a risk-off or risk-on mood."