(Reuters) - Crude oil futures rallied as much as 4 percent on the first trading session of 2016 as tensions between Saudi Arabia and Iran raised fears about the security of oil supplies from the Middle East.
Brent, the global oil benchmark, was up $1.55, or 4.2 percent, at $38.83 a barrel by 10:19 a.m. EST (1519 GMT), after hitting a near three-week high of $38.93 earlier.
Saudi Arabia, the world's biggest oil exporter, cut diplomatic ties with Iran on Sunday, in response to the storming of its embassy in Tehran following Riyadh's execution of a prominent Shi'ite cleric on Saturday. The Middle East is conventionally estimated to hold about half of the world's proven oil reserves.
U.S. crude's West Texas Intermediate (WTI) futures jumped $1.10, or 3 percent, to $38.14 a barrel.
Traders said WTI was also supported initially by data from market intelligence firm Genscape that showed an inventory drawdown of more than 220,000 barrels at the Cushing, Oklahoma delivery hub for U.S. crude futures.
However, another set of Genscape data for the week to Jan. 1 suggested a build of about 480,000 barrels in Cushing instead, traders who saw that data said.
(Reporting by Barani Krishnan; Editing by Chizu Nomiyama and Bernadette Baum)