Oil prices jumped 1.5 percent in Asian trading on Wednesday after a media report showed Israel was preparing for a potential military strike on Iran's nuclear facilities, raising concerns about supply disruptions.

Market participants also digested the industry's weekly report showing an unexpected build in U.S. crude inventories.

As of 21:10 EST, Brent crude futures expiring in July rose 1.5% to $66.42 a barrel, and West Texas Intermediate (WTI) futures also climbed 1.5% to $62.92 a barrel.

Israel is preparing for a potential military strike on Iran's nuclear facilities, CNN reported on Tuesday, as the United States continues to seek a diplomatic deal with Tehran. The report cited several U.S. officials familiar with the latest intelligence.

The report said Israeli leaders had not yet made a final decision, but the likelihood of an Israeli strike had "significantly increased" in recent months.

"This U.S. intelligence-based news could signal a significant escalation, prompting the oil market to price in a higher geopolitical risk premium for the region," ING analysts said in a note.

"Such an escalation would not only put Iranian supplies at risk, but would also affect large parts of the wider region," they added.

The news comes as US-Iran nuclear talks continue, with Iran reiterating that its uranium enrichment program is "absolutely not negotiable." The United States has demanded that Iran halt all uranium enrichment activities, citing concerns about potential nuclear weaponization.

The CNN report added that a strike would be more likely if the US-Iran nuclear deal under President Trump failed to eliminate all Iranian uranium.

The American Petroleum Institute (API) reported on Tuesday that U.S. domestic crude oil inventories unexpectedly increased weekly.

U.S. crude oil inventories rose by about 2.5 million barrels in the week ended May 16, contrary to expectations for a 1.9 million-barrel drop and following the 4.3 million-barrel increase reported by the API the previous week.

Gasoline inventories fell by about 3.2 million barrels, while distillate stocks, which include diesel and heating oil, fell by 1.4 million barrels.

"Inventory data continue to point to a tightening middle distillate market," ING analysts said.

Investors now await official data from the U.S. Energy Information Administration (EIA) due later in the day to confirm these trends.