Nginx is only redirecting to port 8080

I have a .net 8 solution multiple APIs and I'm using docker and Nginx to host the application. please find below the full details:

Dockerfile

 

FROM mcr.microsoft.com/dotnet/aspnet:8.0 AS base
WORKDIR /app
EXPOSE 8080


FROM mcr.microsoft.com/dotnet/sdk:8.0 AS build
ARG BUILD_CONFIGURATION=Release
...

FROM build AS publish
ARG BUILD_CONFIGURATION=Release
RUN dotnet publish "xxx.Api/xxx.Api.csproj" -c Release -o /app/publish /p:UseAppHost=false

FROM base AS final
WORKDIR /app
COPY --from=publish /app/publish .
ENTRYPOINT ["dotnet", "xxx.Api.dll"]

 

launchsettings.json

 

"Docker": {
"commandName": "Docker",
"launchBrowser": true,
"launchUrl": "{Scheme}://{ServiceHost}:{ServicePort}/swagger",
"publishAllPorts": true,
"useSSL": true,
"sslPort": 4430,
"httpPort": 8080
}

 

nginx.conf

 

worker_processes auto;

events {
worker_connections 1024;
}

http{

server {
listen 80;
server_name domain;
port_in_redirect off;

location /api1 {
rewrite /api1(.*) $1 break;
proxy_pass http://api1:8080;
proxy_http_version 1.1;
proxy_set_header Upgrade $http_upgrade;
proxy_set_header Connection 'upgrade';
proxy_set_header Host $host;
proxy_cache_bypass $http_upgrade;
}

location /api2 {
rewrite /api2(.*) $1 break;
proxy_pass http://api2:8081;
proxy_http_version 1.1;
proxy_set_header Upgrade $http_upgrade;
proxy_set_header Connection 'upgrade';
proxy_set_header Host $host;
proxy_cache_bypass $http_upgrade;
}
}

 

docker-compose

 

version: '3.4'

services:

nginx:
image: nginx
ports:
- 80:80
volumes:
- ./nginx.conf:/etc/nginx/nginx.conf:ro
depends_on:
- api1
- api2


api1:
image: ${DOCKER_REGISTRY-}api1:latest
container_name: api1
build:
context: .
dockerfile: api1.Api/Dockerfile
ports:
- "8080:8080"


api2:
image: ${DOCKER_REGISTRY-}api2:latest
container_name: api2
build:
context: .
dockerfile: api2.API/Dockerfile
ports:
- "8081:8081"

 

API1 that uses port 8080 loads normally but API2 that uses 8081 get error 502 gateway error.
If I switch the port on those same projects than API2 loads normally and API1 stops loading.
I've been trying all kinds of stuff over last 2 days and nothing seems to work.
Those same projects with the same configuration were working perfectly when I was using .net 6 with the same nginx version, but when I upgraded the project to .net 8 it broke.
I need your help and suggestions. Anything will be helpfull.