The correct answer is option 'C': Quenching arc.

Explanation:
Oil circuit breakers are a type of circuit breaker that use oil as the medium for extinguishing the arc produced by the flow of current during the interruption process. The main purpose of using oil in an oil circuit breaker is to effectively extinguish the arc that is formed when the contacts of the circuit breaker open.

Here is a detailed explanation of why oil is used in an oil circuit breaker:

1. Quenching Arc:
- When the contacts of a circuit breaker open, an arc is formed due to the ionization of air between the contacts.
- This arc carries the current until it is extinguished, and during this time, it can cause damage to the contacts and the surrounding equipment.
- Oil circuit breakers use oil as a quenching medium to rapidly cool and extinguish the arc.
- The oil has high dielectric strength and excellent insulating properties, which help in effectively breaking the circuit and suppressing the arc.

2. Insulation:
- While oil does provide some insulation between the contacts, its main purpose in an oil circuit breaker is not insulation.
- The dielectric strength of the oil helps to prevent the re-ignition of the arc after it has been extinguished.
- The oil acts as a barrier between the contacts, preventing the arc from re-establishing itself and ensuring that the circuit remains open.

3. Cooling of Contacts:
- Although the oil does provide some cooling effect, it is not the main purpose for its use in an oil circuit breaker.
- The arc produced during the interruption process generates a significant amount of heat.
- The oil helps in absorbing this heat and dissipating it, preventing the contacts from overheating and damaging.
- The cooling effect of the oil helps in maintaining the reliability and longevity of the circuit breaker.

In conclusion, the main purpose of using oil in an oil circuit breaker is to quench the arc produced during the interruption process. The oil helps in rapidly cooling and extinguishing the arc, preventing damage to the contacts and the surrounding equipment. While the oil does provide insulation and cooling, these are secondary functions in an oil circuit breaker.