Assuming that your TV has proper 120Hz support (meaning that it will accept a 120Hz signal and display it at 120Hz rather than merely accepting a 60Hz signal and interpolating it to 120Hz), then you want to make sure your Xbox itself is set to output 120Hz. Not only will this allow you to view 120fps games (rare) at their full framerate, but it will also result in reduced input latency for 60 and 30fps games.
As a rule, you're correct: you typically want to have your frame rate equal your refresh rate, synced with V-Sync, for a smooth experience. However, if the refresh rate is a multiple of the framerate, you can still achieve smooth motion. On the Xbox, 120Hz works fine with 30fps and 60fps games as each frame will simply be repeated 4 or 2 times to match the refresh rate. Modern TVs may also support Variable Refresh Rate (VRR), which allows the smooth display of framerates fluctuating outside of 30/60/120. Essentially it allows the TV refresh rate to change dynamically to match the game's framerate, so if the game is rendering at, say, 46fps, the display will be running at 46Hz and so on.
Unfortunately, CP2077's performance mode on the Series X is one of the worst 60fps modes I've ever experienced in an Xbox game. It's full of stutter and frequently drops below 60fps. The drops would be less of a problem if VRR worked, but in my experience, it doesn't. I'm using FreeSync, however. Your OLED TV probably uses HDMI 2.1 VRR (if it has VRR at all), so YMMV. Someone on reddit claimed that they had VRR working in CP2077 on their OLED TV. All I know is that FreeSync does not work with CP2077 on a Series X (despite it working perfectly in TW3 and every other game I've played).
TL;DR: Set your Xbox to 120Hz in 'TV & display options' and make sure 'Allow variable refresh rate' is enabled (if available) in 'Video Modes', but don't expect a good 60fps experience from CP2077 on the XSX.
