Is there a way to authorize cloud rest api (create/update issue) using oauth 2.0
Welcome to the Atlassian developer community @MaitriDalal1,
Yes. The question is somewhat confusing to me because I don’t know how to authenticate with Gmail or Microsoft as a provider. Perhaps you are thinking of Open ID Connect, which is not supported for Jira.
Sorry for the confusion. I tried OAuth 2.0 (3LO) apps. And it is showing me this warning.
Do I have to publish the app to make this warning go away? I want to publish it private in the marketplace for now. Is that possible? Thanks
You will need to get your app reviewed by Atlassian. That process of “distribution” is separate from publishing it to the Marketplace.
Thanks @ibuchanan . That was very helpful. So if I get my app reviewed by Atlassian that app still in development mode warning will no longer appear. i.e. the process of distribution. One more small question. How many days it usually takes for approval. Thanks so much in advance!
The “development mode” warning will go away. To my knowledge, the warning is a bit excessive because you are the only person who can go through the authorization flow, until you use the distribution process. You trust the developer because you are the developer, right? 
After distribution and for other people, there will still be some warnings but they should be appropriate (sorry, I don’t have an example to share).
Last I checked, App approval requests have an objective for resolution in 10 business days or less. All kinds of apps go through the same support team so your patience is appreciated.
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Thanks @ibuchanan !