Why is oil used in transformer construction instead of air?

Oil is used instead of air because it provides significantly higher dielectric strength and superior heat transfer. Oil fills internal voids, reducing partial discharge risk and preventing insulation breakdown. It efficiently transfers heat from windings to cooling surfaces, allowing compact designs with higher power density. Air insulation would require much larger clearances and cooling systems, making high voltage and high MVA transformers impractical. Oil also protects cellulose insulation from oxidation, extending transformer service life.