Oxarfjordur is encircled by mountain ranges to the west and east, and the Gjastykki lava fields and an area with sand deposited by the glacial river Jökulsá in the south. The only village in the area is Kopasker with about 170 inhabitants. The Mid-Atlantic ridge runs through the western part of the fjord before going underwater again. Öxarfjörður went deeper inland in earlier geological times but the glacial river Jökulsá deposited sands from the highlands on a triangular area of about 300 km² called Sandur. Sandur is still trenched by the delta of Jökulsá which is constantly changing its riverbed. There are two big lakes on Sandur, Vikingavatn and Skjálftavatn, the latter one formed by an earthquake in 1976, over the course of which some houses in the area were destroyed.