The function of transformer oil is insulation and cooling of transformers. A transformer consists of metal, oil, and cardboard insulation. The oil is actually insulating oil and is used not only in transformers, but also in circuit breakers, capacitors, bushings, and tap changers. Insulating oil is a refined mineral oil obtained from fractional distillation of crude oil. It is free of moisture, inorganic acids, alkali, sulfur, asphalt, tar, and vegetable or animal oils.