"This attack represents the most serious resumption of hostilities" since President Salva Kiir and his former deputy, rebel leader Riek Machar, met in May and recommitted to a January ceasefire, the UN mission said in a statement.
The fighters loyal to Machar struck Nasir, their former headquarters, located 500 kilometres north of Juba and close to Ethiopia, which was retaken by government forces in May.
UNMISS, the UN mission, laid the blame squarely for the renewed fighting with Machar's forces. "The attack is a clear violation of the Cessation of Hostilities Agreement," it said.
"The fall of Nasir now paves the way for military resources to be refocused on Poloich Oil Fields, Maban and Malakal", Kuang said in a statement, referring to the main remaining oil field still in activity.
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South Sudanese army spokesman Philip Aguer denied Nasir had fallen, describing fighting as "still ongoing".
Aguer said army forces had staged nine offensives on Nasir on Sunday.
Only days earlier mediators had pressed the rival sides to resume peace talks being held in Ethiopia, or face increased sanctions.
"It is deplorable that this major attack comes at a time when intensive efforts are under way by mediators of the Intergovernmental Authority on Development (IGAD) to convince all parties to resume the suspended peace talks in Addis Ababa," UNMISS acting head Raisedon Zenenga said in the statement.
South Sudan, the world's youngest nation, marked only the third anniversary of its independence this month under the shroud of a war which has enflamed ethnic hatred and brought its people to the brink of famine.
An estimated 1.5 million people have been displaced and thousands killed, including civilians massacred indiscriminately in hospitals and churches and dumped in mass graves.
The last UN head lambasted both sides in the South Sudanese conflict on her way out of the country earlier this month, saying they were causing a "man-made famine".
Analysts say both sides believe the war is still winnable by force.
Fighting had abated since May in part due to heavy rains and poor roads that hampered troop and equipment movements.