Transformer oil is a special type of refined petroleum oil. It provides both insulation and cooling to electrical equipment. Additionally, we utilize insulating oil in power transformers and distribution transformers. We fill the gaps between the core, windings, and interior of the transformer tank with this oil. The presence of oil in the gaps enhances the insulation strength of the transformer. This is how it optimizes the transformer size. The transformer oil inside keeps the transformer cool.

Types of Transformer Oil
Mineral Oil
Utilities still mostly use mineral oil for transformer insulation and cooling purposes. It is nothing but specially treated, refined crude oil. There are mainly two types of mineral transformer oil. These are Naphthenic and Paraffinic oils.
Naphthenic mineral transformer oil is a highly stable type of oil. The pour point of this oil is quite lower than that of a paraffin-based oil. Because of that, the viscosity of oil remains low even in very low temperatures. So, oil in the transformer can flow freely even at low temperatures. This is why it is most suitable for cool atmospheres. The main drawback of naphthenic oil is that it has a greater tendency to form sludge. Due to the non-availability of other alternatives, naphthenic oil is still suitable for low-temperature applications. However, this oil is more expensive than paraffin-based oil.
Paraffinic mineral transformer oil has a higher pour point. It is more stable against oxidation than naphtha oil. Hence, the tendency of sludge formation is less than that of a naphthenic oil. At the same time, it has a higher boiling point. It is cheaper than naphthenic transformer oil. However, due to its high pour point, we can not use paraffin oil in cold places. On the other hand, paraffin oil is a cost-effective solution for transformers in hot places.
Synthetic Oil
This is not crude oil. This is artificially manufactured and processed transformer oil. It performs much better than mineral oil. However, it costs more than mineral transformer oil. There are mainly two types of synthetic oil. These are silicon-based oil and ester-based oil. Although there are some other types of synthetic oil available in markets.
Silicone oil offers better thermal stability, electrical insulation, and resistance to oxidation and fire. However, it costs much more than mineral transformer oil.
Ester oil is processed from biodegradable byproducts. It possesses good insulation and cooling properties. There are two types of ester oil used as insulation oil. These are natural ester oil and synthetic ester oil. In view of fire safety, the use of ester-based transformer oil is increasing nowadays. Ester oil is much less likely to catch fire than mineral oil.