Why are transformers filled with oil instead of air insulation?

Oil provides higher dielectric strength than air, fills voids to reduce partial discharge, and improves insulation coordination at high voltages. Oil also removes heat efficiently, enabling higher power density and higher MVA ratings in a compact design. Air insulation would require much larger clearances and would not cool windings as effectively. Oil also supports condition monitoring through DGA, offering early fault detection. For outdoor and high voltage systems, oil filled designs often provide the best balance of reliability, size, and cost.