Volatile oil recovery by means of air injection is studied as a method to improve recovery from low permeable reservoirs. We consider the case in which the oil is directly combusted into small products, for which we use the term medium temperature oil combustion. The two-phase model considers evaporation, condensation and reaction with oxygen. In the absence of thermal, molecular and capillary diffusion, the relevant transport equations can be solved analytically. The solution consists of three waves, i.e., a thermal wave, a medium temperature oxidation (MTO) wave and a saturation wave separated by constant state regions. A striking feature is that evaporation occurs upstream of the combustion reaction in the MTO wave. The purpose of this paper is to show the effect of diffusion mechanisms on the MTO process. We used a finite element package (COMSOL) to obtain a numerical solution; the package uses fifth-order Lagrangian base functions, combined with a central difference scheme. This makes it possible to model situations at realistic diffusion coefficients. The qualitative behavior of the numerical solution is similar to the analytical solution. Molecular diffusion lowers the temperature of the MTO wave, but creates a small peak near the vaporization region. The effect of thermal diffusion smoothes the thermal wave and widens the MTO region. Capillary diffusion increases the temperature in the upstream part of the MTO region and decreases the efficiency of oil recovery. At increasing capillary diffusion the recovery by gas displacement gradually becomes higher, leaving less oil to be recovered by combustion. Consequently, the analytical solution with no diffusion and numerical solutions at a high capillary diffusion coefficient become different. Therefore high numerical diffusion, significant in numerical simulations especially in coarse gridded simulations, may conceal the importance of combustion in recovering oil.