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Oil rose slightly in early trade on Wednesday as concern over escalating conflict in Europe and the Middle East offset demand worries following an unexpected build in U.S. crude inventories.

Brent crude futures for August delivery rose 6 cents to $85.39 a barrel by 0016 GMT. U.S. West Texas Intermediate crude for June was up 10 cents to $81.67 per barrel.

Both benchmarks were up by more than a $1 in the previous session after a Ukrainian drone strike led to an oil terminal fire at a major Russian port, according to Russian officials and a Ukrainian intelligence source.

In the Middle East, meanwhile, Israeli Foreign Minister Israel Katz warned of a nearing "all out war" with Lebanon's Hezbollah, even as the U.S. attempted to avoid a broader conflict between Israel and Iran-backed Hezbollah.

An escalating war in the region raises the prospect crude supply from key producers could be disrupted.

Keeping oil prices from rising further, U.S. crude stocks rose by 2.264 million barrels in the week ended June 14, according to market sources citing American Petroleum Institute figures on Tuesday. Analysts polled by Reuters had expected a 2.2 million barrel draw in crude stocks.

Gasoline inventories, however, fell by 1.077 million barrels, while distillates rose by 538,000 barrels, the sources said, speaking on condition of anonymity. [API/S]

Official U.S. stocks data from the Energy Information Administration are due at 1500 GMT.