What risks are associated with oil leakage from a transformer?

Leakage reduces oil level and can expose windings or insulation, increasing overheating and dielectric breakdown risk. Leaks can also introduce moisture and oxygen, accelerating oil oxidation and paper aging. Environmentally, oil can contaminate soil and water and trigger regulatory reporting and cleanup obligations. Fire risk increases if oil contacts hot surfaces or electrical arcs. Operationally, leaks can lead to forced outages and expensive repairs. Even small chronic leaks matter because they often worsen with thermal cycling, so early detection and repair reduce both reliability and environmental risk.