Why is oil used in transformers instead of air insulation?

Oil provides much higher dielectric strength than air, allowing compact clearances and better impulse withstand. It also removes heat far more effectively, carrying thermal energy from windings to radiators and maintaining acceptable temperature rise under load. Additionally, oil can suppress arcing and distribute electric field stress in complex geometries. Air insulated designs exist, but for high voltage and high MVA outdoor applications, oil often delivers better performance per cost and size.