Most major stock markets in the Gulf edged higher in early trade on Tuesday on hopes for possible US interest rate cuts, while expectations of increasing fuel demand during the summer travel season also boost sentiment.

Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by the Federal Reserve’s policy because most regional currencies are pegged to the US dollar.

US monthly inflation was unchanged in May as a modest increase in the cost of services was offset by the largest drop in goods prices in six months, drawing the Fed closer to start lowering rates later this year.

Saudi Arabia’s benchmark index gained 0.1%, helped by a 1.8% rise in Al Taiseer Group and a 0.7% increase in oil giant Saudi Aramco.

Meanwhile, the kingdom’s energy minister announced on Monday the discovery of seven oil and gas deposits in the kingdom’s Eastern Province and Empty Quarter, Reuters reported, citing the official Saudi news agency SPA.

Major Gulf bourses track oil prices higher

Crude oil - a catalyst for the Gulf’s financial markets - rose, building on a strong rally in the previous session. Gasoline demand in the US, the world’s biggest oil consumer, is expected to ramp up as the summer travel season picks up with the Independence Day holiday this week.

Dubai’s main share index added 0.4%, driven by a 2% rise in toll operator Salik Co. In Abu Dhabi, the index was up 0.1%.

The Qatari benchmark inched 0.1% higher, with the Gulf’s biggest lender Qatar National Bank gaining 0.3%.