Brent oil tops $104 after Trump says ceasefire with Iran is on 'life support'

Oil prices rose Monday after President Donald Trump said the ceasefire with Iran is on life support, after he rejected Tehran's counterproposal to end the conflict.

U.S. West Texas Intermediate futures with June delivery advanced nearly 3% to close at $98.07 per barrel. International benchmark Brent crude futures with July delivery rose nearly 3% to settle at $104.21.

Trump told reporters that the state of the ceasefire is "unbelievably weak." He called Iran's counterproposal to end the conflict "garbage."

"I would say the ceasefire is on massive life support, where the doctor walks in and says, 'Sir, your loved one has approximately a 1% chance of living,'" the president said.

WTI and Brent are both up more than 40% since the U.S. and Israeli-led war against Iran started on Feb. 28.

Israeli Prime Minister Benjamin Netanyahu, meanwhile, warned that the conflict with Iran was "not over," raising fears that tensions in the Middle East could escalate again and further threaten energy supplies. 

"There's still nuclear material, enriched uranium that has to be taken out of Iran," Netanyahu said on Sunday in an interview on CBS's "60 Minutes." "There is still enrichment sites that have to be dismantled, there's still proxies that Iran supports, there are ballistic missiles that they still want to produce ... there's work to be done."

Asked how the U.S. and Israel would remove the nuclear material, Netanyahu replied: "You go in, and you take it out."

Citi analysts wrote in their latest oil report that prices could rise further if Iran and U.S. do not agree a deal, adding that crude markets have been cushioned by high inventories, strategic petroleum reserve releases, weaker demand in developing economies and intermittent signs of possible de-escalation in the Middle East. 

Citi maintained that risks to oil prices remain tilted to the upside, as Iran retains significant control over the timing and terms of any potential agreement to reopen the critical Strait of Hormuz energy route.

"We assume that the regime will make a deal that reopens the Strait around end-May … but we continue to see the risks skewed towards this timeline being pushed out and/or a partial reopening, which means disruptions for longer."

Felipe Elink Schuurman, CEO and co-founder of Sparta Commodities, said the coronavirus pandemic serves as a good analogy for current developments in oil markets.

"In 2020, on average, we lost 9 million barrels per day of demand versus 2019, which is pretty much the equivalent of what we are losing now in terms of supply. So, the market will have to adjust, and we will have to get to that level of demand destruction," Schuurman told CNBC's "Squawk Box Europe" on Monday.

"Now the question is 'where is that demand destruction going to come?' And unfortunately, it's going to be a situation where the richer countries are going to pay up. Maybe you don't see $200 on crude, but you will see that on a regular basis on products, which is what people consume," he continued.

"You are going to end up in a scenario where poorer countries are going to have a humanitarian crisis, Europe is going to have an economic crisis and the U.S., a political one."

— CNBC's Garrett Downs contributed to this report.