Interfacial tension (IFT) indicates the level of polar contaminants formed during oil oxidation and insulation aging. As transformer oil degrades, oxidation byproducts such as acids, sludge precursors, and dissolved cellulose compounds reduce IFT. A declining IFT value is an early warning of oil deterioration, often before dielectric strength drops significantly. Low IFT suggests increased risk of sludge formation, restricted cooling ducts, and accelerated thermal aging of paper insulation. Utilities monitor IFT trends alongside acidity, moisture, and DGA to determine whether oil reclamation or replacement is required.