The Organization of Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, agreed on Thursday to stick to their existing policy of monthly oil output increases.
"Slower shale production growth will come at the cost of a faster normalisation in OPEC spare capacity, which would turn particularly bullish if no deal with Iran is agreed to in 2022," the bank said in a note dated Thursday.
The decision adds upside risks to its $85-per-barrel (bbl) Brent forecast for 2023, the bank added.
Morgan Stanley analysts also said the OPEC+ decision softened its estimated oil market balances for the first half of 2022 but said the market will likely return to undersupply and inventory draws from mid-2022 onwards.
"It will probably take some time for the oil market to find its footing again" Morgan Stanley analysts cautioned in a research note dated Thursday.
Oil prices climbed on Friday, extending gains after OPEC+ said it would review supply additions ahead of its next scheduled meeting if the Omicron coronavirus variant dents demand.
Goldman said oil prices would need more information on the virulence of Omicron to recover in the short-term and evidence of a tight physical market for a return above $80/bbl, in the absence of increased risk appetite.
"Lower prices that are now likely to persist in coming weeks may reduce the urgency in coming to a deal with Iran, which would have provided additional barrels to help cope with a tight oil market," the bank added.
(Reporting by Seher Dareen and Nakul Iyer in Bengaluru; editing by Jason Neely)