NEW YORK (CNNMoney.com) -- Oil prices hit yet another record Thursday, soaring almost $2 a barrel, as escalating violence in the Middle East raised fears about severe supply disruptions.

Also boosting crude: a pipeline attack in Nigeria and a big drop in U.S. crude supplies.

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U.S. crude for August delivery jumped $1.75 to settle at $76.70 a barrel, the highest for a front-month contract since the New York Mercantile Exchange began trading oil futures in 1983.

Earlier in the session, the contract hit $76.85 a barrel, topping the previous record trading high of $75.78 set July 7.

In a sharp escalation in Mideast violence, Israeli warplanes bombed Beirut's international airport and its navy blockaded Lebanon's ports. Hezbollah guerrillas fired scores of rockets from Lebanon into northern Israel in the most intense bombardment in years.

One analyst said Iran, which has been thought to provide financial and military aid to Hezbollah in the past, may be linked to the conflict, raising fears that the country, the world's fifth-largest oil producer, could severely disrupt world oil supplies.

"We're not just talking about their oil, we're talking about 25 percent of the world's oil that flows off their coast through the Strait of Hormuz," said John Kilduff, an energy analyst at Fimat in New York. "And if they are to use oil as a weapon, we suspect they'll get support from Venezuela. That would send oil incalculably higher."

But Kilduff was quick to note that it isn't just geopolitical tensions that are responsible for the recent price run-up, pointing to record U.S. gasoline demand despite spiraling prices.

"The consumer hasn't reacted to $3 gasoline," he said. "The consumer can actually fight back by driving less. If [they] signal to the market that demand is elastic, prices will come down."

Kilduff said the record crude prices will translate into an extra eight to 10 cents a gallon at the pump within the next week or two. "It's going to be rapid, and it's going to be sustained," he said.

In more trouble for the consumer, heating oil futures hit a two-month high, bolstered by big fund buying on fears that heating and diesel oil production is taking a back seat to gasoline refining, Reuters reported.

Kilduff said he though geopolitical concerns were adding about $20 to the cost of a barrel of crude oil, while speculative buying by big investors was tacking on $10.

Oil has soared nearly 25 percent since the start of the year and in excess of 300 percent since 2002.

Most analysts blame much of the rise on growing demand that has outstripped the pace of supply.

That has caused the world's spare production capacity to drop from more than 5 million barrels a day to around 1 million now, which means producer nations can't fill the gap if a supply disruption occurs in places like Iran or Nigeria. It also means political or military spats that were once mere afterthoughts can move prices in a big way.

In addition, Western powers agreed Wednesday to send the case of Iran back to the United Nations Security Council for possible punishment after the country refused to immediately accept a package of incentives in return for halting some work on its nuclear program.

Iran has been locked in a dispute with the West for months over its nuclear ambitions, which it says are for peaceful power-generating purposes but which many intelligence analysts suspect are intended to build a bomb. Some Iranian officials have threatened to withhold oil if sanctions are imposed against the country.

Hope that Iran would agree to a deal earlier this week drove oil prices down to around $73 a barrel.

In Nigeria, the world's No. 8 exporter, two explosions tore through a crude oil pipeline operated by Italy's Agip that feed the Brass oil terminal, causing massive oil spills in Nigeria's southern state of Bayelsa, Reuters reported.

Output in the country has already been cut by militants, who come from a poor but oil-rich part of the nation and are demanding more of the oil wealth.

Adding to oil's surge was a report Wednesday that said U.S. supplies of crude oil fell by 6 million barrels, nearly five times the drop expected.

One analyst said the steep decline could have been due to an oil spill that closed a major shipping lane along the Gulf Coast last week.

But despite the fall in crude stocks, they still remain well above average, while gasoline and distillate supplies are slightly above average, the government said in its weekly inventory report.

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