Why is oil used in transformers for insulation and cooling?

Transformer oil serves two primary roles. First, it provides dielectric strength, filling voids and suppressing partial discharge that could occur in air gaps. Second, it removes heat from windings and core, carrying thermal energy to radiators or coolers where it dissipates to the environment. Oil also supports arc quenching in some fault conditions and protects solid insulation by reducing oxygen exposure when used with sealed designs. Proper oil quality directly impacts reliability, life expectancy, and safe loading capability.