(Reuters) -U.S. stock index futures edged higher on Monday as easing oil prices helped calm sentiment despite ongoing attacks between Iran and Israel and increased focus on the upcoming Federal Reserve meeting.

Wall Street indexes shed more than 1% on Friday as oil prices surged 7% after Israel and Iran traded air strikes, feeding investor worries that the combat could widely disrupt oil exports from the Middle East.

The dangers of further escalation loomed over a meeting of the Group of Seven leaders in Canada, with U.S. President Donald Trump expressing hope on Sunday that a deal could be done, but no signs of the fighting abating on the fourth day of war.

Crude prices, however, pulled back slightly from January highs, offering some respite to investors worried about a resurgence in inflation.

The surge in oil prices comes ahead of the Fed's monetary policy decision on Wednesday, when policymakers are widely expected to keep interest rates unchanged.

Investors will focus on Fed Chair Jerome Powell's comments as well as the central bank's updated projections for monetary policy and the economy for clues on potential rate cuts later this year.

Money market moves show traders are pricing in about 48 basis points of rate cuts by the end of 2025, with a 55% chance of a 25-bps rate cut in September, according to CME Group's Fedwatch tool.

"We expect the median participant to take on a more stagflationary flavor following April's tariff surprises, despite eased financial conditions from the weaker dollar, with higher inflation and downgraded GDP growth in 2025," Barclays strategists said in a note.

"The dot plot is likely to show delayed rate cuts, with just one this year and three in 2026."

Key data this week includes monthly retail sales and import prices.

By 5:38 a.m. ET (0938 GMT), S&P 500 E-minis were up 23.75 points, or 0.4%, Nasdaq 100 E-minis rose 99 points, or 0.46%, and Dow E-minis added 143 points, or 0.34%.

Shares of Sarepta Therapeutics plunged 30% in premarket trading after the company disclosed a second case of patient death due to acute liver failure after receiving its gene therapy for a rare form of muscular dystrophy.

U.S. Steel rose 5% after Trump approved Nippon Steel's $14.9 billion bid for the company.

(Reporting by Sruthi Shankar in Bengaluru)