Transformer serves as a vital component in the electrical energy supply system. In order to have an uninterrupted power supply, it is essential to timely monitor the condition of the transformer. A transformer has many components, out of which the transformer oil is one of the most crucial. It provides insulation and keeps the transformer cool. With ageing, the quality of the transformer oil degrades, and it loses its insulation properties that become a threat to the supply system. Optical Spectroscopy has gained a lot of attention in monitoring the quality of transformer oil in the past few years for various advantages. This paper reviews some of the commonly applied Spectroscopy techniques to monitor the various components of transformer oil by which we can predict the quality of the oil.