Oil cooling refers to a process whereby heat is displaced from a 'hotter' object, into a cooler oil and is the principle behind oil cooler devices. The oil carrying the displaced heat usually passes through a cooling unit such as a radiator

Radiator

Radiators are heat exchangers used to transfer thermal energy from one medium to another for the purpose of cooling and heating. The majority of radiators are constructed to function in automobiles, buildings, and electronics...

 or less commonly a gas decompresser. The cooled oil repeats this cycle, to continuously remove heat from the object.

Advantages

• Oil has a higher boiling point
  Boiling point
  The boiling point of an element or a substance is the temperature at which the vapor pressure of the liquid equals the environmental pressure surrounding the liquid....
  
   than water, so it can be used to cool items 100°C or higher.
• Oil is an electrical insulator; thus, it can be used inside of or in direct contact with electrical components.

Disadvantages

• Coolant oil may be limited to cooling objects under approximately 200°C - 300°C.
• Parts are hard to take out and put in after the oil is put in.

Gas cooling

For the instance where an object to be cooled is greater in temperature than the range a cooling oil can remain stable, a compressed cooled gas would be used. As compressed gas is decompressed, heat is absorbed from surroundings of the gas, in particular, the hot object.