Asian stocks fell after Saudi Arabia’s severing of diplomatic ties with Iran weighed on risk appetite, while a surge in crude oil boosted energy producers.

The MSCI Asia Pacific Index slid 0.3 percent to 131.57 as of 9:01 a.m. in Tokyo. The yen traded near the highest in more than two months, dragging shares in Tokyo lower. Energy shares advanced after Saudi Arabia expelled the Islamic Republic’s diplomats from the country following an attack on its embassy in Tehran to protest the Saudis’ execution of a prominent Shiite cleric. The move marks the worst crisis in relations between the nations since the late 1980s.

Asian shares are trading for the first day of 2016 after posting back-to-back annual losses. Brent crude tumbled 35 percent last year and the Bloomberg Commodity Index slumped 25 percent amid an oil supply glut and as Chinese economic growth slowed, pressuring equity markets and corporate profits.

Source: Bloomberg