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The oil in OCBs serves two purposes. It insulates between the phases and between the phases and the ground and it provides the medium for the extinguishing of the arc.When electric arc is drawn under oil, the arc vaporizes the oil and creates a large bubble that surrounds the arc. The gas inside the bubble is around 80% hydrogen, which impairs ionization. The decomposition of oil into gas requires energy that comes from the heat generated by the arc. The oil surrounding the bubble conducts the heat away from the arc and thus also contributes to deionization of the arc.
Main disadvantage of the oil circuit breakers is the flammability of the oil, and the maintenance necessary to keep the oil in good condition (i.e. changing and purifying the oil)