"I'm sorry" can mean "I am apologizing" but often it instead means "I feel bad". It depends on context which applies.

"I'm sorry for how you feel" without more explanation often sounds like "The thing that makes me feel bad in this situation is your reaction to it". It can come across as blaming the person for the feelings, regretting not being able to control others' feelings better, or dismissing the root causes of the feelings and any agency in them.

It's a bad apology because of the ambiguity, though passive aggressive types like that aspect. It's honestly a bad way to sympathize as well.