Turn on a multi-functional pressure cooker (such as Instant Pot(R)) and select Saute function to heat the pot. Add olive oil and onion; cook until onion is translucent, 3 to 5 minutes. Add garlic and cook until fragrant, about 1 minute. Pour in red wine and simmer until reduced by half.
Pour diced tomatoes and whole tomatoes into the pot. Bring to a simmer. Stir in basil, oregano, parsley, salt, pepper, red pepper flakes, and bay leaf. Press Keep Warm. Close and lock the lid. Seal the vent. Select Manual function and set timer for 10 minutes. Allow 10 to 15 minutes for the pressure to build.
Release pressure carefully using the quick-release method according to manufacturer's instructions, about 5 minutes. Unlock and remove the lid. Discard bay leaf. Use an immersion blender to puree the sauce.