The British bank, which revised its forecasts for the first time in almost a year, saw Brent and WTI crude prices averaging $71 a barrel and $68 a barrel respectively this year.
It also raised its 2019 price outlook by $13 with Brent oil seen averaging $75 a barrel and WTI $71.
"OPEC and its non-OPEC partners are now receiving greater acknowledgment for market discipline, views of shale oil economics are no longer the most important price-setting factor, and demand pessimism is significantly reduced," the bank said.
The Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia have agreed to cap output by about 1.8 million bpd in a deal running from January last year until the end of 2018.
Oil prices were little changed on Tuesday after Brent hit its highest level since November 2014, supported by strong demand, OPEC-led production cuts, and the prospect of renewed U.S. sanctions on Iran. [O/R]
"Should the U.S. waiver on certain sanctions on Iran not be renewed in May, we are likely to roll our forecast back to where it was two years ago, to $75 per barrel," the bank said.