Corrosion is a key limiting factor in the degradation of zirconium alloys in light water reactors. Developing a mechanistic understanding of the corrosion process offers a route towards improving safety and efficiency as demand increases for higher burn-up of fuel. Oxides formed on zirconium alloys are composed of both monoclinic and meta-stable tetragonal phases, and are subject to a number of potential mechanical degradation mechanisms. The work presented investigates the link between the tetragonal to monoclinic oxide phase transformation and degradation of the protective character of the oxide layer. To achieve this, Abaqus finite element analysis of the oxide phase transformation has been carried out. Study of the change in transformation strain energy shows how relaxation of oxidation induced stress and fast fracture at the metal-oxide interface could destabilise the tetragonal phase. Central to this is the identification of the transformation variant most likely to form, and understanding why twinning of the transformed grain is likely to occur. Development of transformation strain tensors and analysis of the strain components allows some separation of dilatation and shear effects. Maximum principal stress is used as an indication of fracture in the surrounding oxide layer. Study of the stress distributions shows the way oxide fracture is likely to occur and the differing effects of dilatation and shape change. Comparison with literature provides qualitative validation of the finite element simulations.