The Oxyale is used to breathe underwater, and is necessary if you wish to travel to the Sunken Shrine (which, by the way, you do). It flows freely from the spring in Gaia, but only the Fairy can get it for you. Unfortunately, the Fairy has been kidnapped by a pirate and sold to the Caravan; buy her back if you want the Oxyale (and, if we must say it again, you do).

Fairy at Gaia