Oil jumped after Israel and Iran continued attacks on each other over the weekend, with the market bracing for an escalation that could disrupt supply from a region that produces around a third of the world's crude.Brent climbed as much as 5.5% before paring some gains to trade below $76 a barrel, while West Texas Intermediate was near $74. Israel launched an attack on the giant South Pars gas field, forcing the shutter of a production platform, after strikes on Iran’s nuclear sites and military leadership last week.The flare up in tensions has rattled financial markets, with oil jumping more than 13% on Friday before easing, and investors seeking haven assets such as gold. Iran canceled nuclear talks that were scheduled with the US in Oman on Sunday following Israel’s attacks.Israel’s strike on South Pars triggered a powerful explosion and fire at a gas processing plant on Saturday, the semi-official Tasnim news agency reported. Iran’s gas is mainly for domestic use and is not widely exported, with the field providing roughly two-thirds of the country’s supplies, although a type of oil known as condensate is also produced and exported.While an attack on Iran’s gas producing infrastructure is a concern, the biggest fear for the oil market centers on the Strait of Hormuz. Middle East producers ship about a fifth of the world’s daily output through the narrow waterway, and prices could soar further if Tehran attempts to block the route.“A potential blockage of the Strait of Hormuz by Iran remains the most important market-moving event to watch for, which could tip oil markets into unprecedented territory,” Rystad Energy AS Analyst Mukesh Sahdev, said in a note. “There are no signs yet that such a scenario is on the cards.”Still, widely watched market metrics are pointing to panic over prompt supply risks, as well as growing fears of a protracted conflict in the Middle East. The gap between the grade’s two nearest December contracts — a key indicator on long-term balances — rose by as much as $1.29 a barrel to $3.48.Options markets are also flashing warning signs, with skews remaining in a bias toward bullish calls in the Asian session as volatility remains high. Volumes were also far higher than usual.US President Donald Trump said he believed it’s possible Israel and Iran could reach a deal to end the conflict, but may need to continue fighting before coming to an agreement. “Sometimes they have to fight it out, but we’re going to see what happens,” he told reporters at the White House on Sunday.So far, Iran’s oil export infrastructure remains unscathed, but the hostilities have led to prices clawing back all their losses for the year. Concerns over the fallout from Trump’s trade policies, and the rapid increase of production quotas by OPEC+ had weighed on futures.Prices:Brent for August settlement gained 2.0% to $75.68 a barrel at 7:58 a.m. in Singapore after closing 7% higher on Friday.WTI for July delivery climbed 2.0% to $74.42 a barrel.US Stocks Sink, Oil Jumps As Mideast Tensions Build: Markets Wrap. Read more on Markets by NDTV Profit.