The electrodes are typically a pair of contact points that are positioned directly above or on either side of the oil nozzle. Electricity arcs between the two contact points in order to light the oil. The electrodes do not transfer oil or come in contact with the oil, so they cannot actually leak any of the fuel oil themselves. However, they may be partially responsible for leakage problems.
Electrodes must be adjusted to the right distance from the nozzle in order to work correctly. Each furnace model has an optimum position for the electrodes. However, when moving them around, it is possible to bump, twist or damage the fuel line that brings in oil through the nozzle. The result is a leak near the electrode assembly, but one actually coming for the attached oil line, which must be replaced in order to solve the problem.
Oil nozzles and electrode assemblies can be unscrewed and replaced in order to fix damaged parts. However, if the new parts are fitted too tightly, screwed into too much into the oil line, this can actually created a leaking problem through excess force. The oil line threads can become bent or warped, and when the nozzle works some of the oil can escape through the fitting. Install new nozzles carefully and gently to avoid these problems.
The oil may be coming from nearby valves. The valve may have failed or may have been installed incorrectly. Teflon tape, for example, should never be used on valves or fittings, since it can damage equipment and cause leaks. Likewise, by-pass plugs that protect against combustion hazards can only be installed on certain oil furnaces. Trying to install them on a furnace not manufactured for extra components also can result in a leak.