We demonstrate an online (in-situ) sensor for continuous detection of oil contamination in compressed air systems complying with the ISO-8573 standard. The sensor is based on the photo-acoustic (PA) effect. The online and real-time PA sensor system has the potential to benefit a wide range of users that require high purity compressed air. Among these are hospitals, pharmaceutical industries, electronics manufacturers, and clean room facilities. The sensor was tested for sensitivity, repeatability, robustness to molecular cross-interference, and stability of calibration. Explicit measurements of hexane (C6H14) and decane (C10H22) vapors via excitation of molecular C-H vibrations at approx. 2950 cm-1 (3.38 μm) were conducted with a custom made interband cascade laser (ICL). For the decane measurements a (1 σ) standard deviation (STD) of 0.3 ppb was demonstrated, which corresponds to a normalized noise equivalent absorption (NNEA) coefficient for the prototype PA sensor of 2.8×10-9 W cm-1 Hz1/2.