Jurors found the "mostly likely cause" of Lynn Marie Hadley's death was due to a build up of pressure caused by particles in the tank's cylinder.
Paramedics were in the process of giving Mrs Hadley oxygen treatment at her home in New Street, in Shelfield, on April 13, when sparks came from the tank.
Her concerned family members had dialled 999 as Mrs Hadley had a high temperature which was a suspected symptom of coronavirus.
The sparks set the armchair she was in alight and the flames eventually engulfed the house. Her medical cause of death was given as fatal burn injuries.
Jurors at Black Country Coroner's Court heard evidence into Mrs Hadley's death for three days before they reached a verdict on the final day after several hours of deliberation.
A statement from a juror said: "Mrs Hadley came to her death [in the] most likely cause [of] adiabatic compression due to particle displacement found in the 02 [oxygen] cylinder."
Jurors further concluded her death was "accidental".
It was a freak accident that tragically cost the life of Lynn Hadley who was a grandmother and retired shop worker.
She had been suffering with a high temperature, in what was a suspected symptom of coronavirus, and her concerned family members called 999 for help, shortly before 5pm on April 13.
Upon arrival, ambulance crews checked over Mrs Hadley and found she had a raised temperature of 39.1C.
Her oxygen levels were also low and combined with breathing difficulties, they decided to give her oxygen.
A female paramedic, called Emma Spencer, took the oxygen tank out of a bag and placed it on the armchair, where Mrs Hadley was sitting in the living room.
She turned on the tank's flow valve but couldn't hear any gas so she then turned on the regulator.
At this point, sparks came from the top of the tank which was described as being like a "Roman candle" by Mrs Hadley's daughter Kelly, who was present in the room alongside David, Mrs Hadley's husband, and an ambulance technician called Steven Kelly.
Ms Spencer described seeing the sparks get bigger and bigger and feared the oxygen bottle would blow up. At seeing the sparks, Kelly said she heard someone shout "get out".
The room filled with black smoke and Mr Hadley described seeing "fire upon the floor".
Mr Hadley and Mr Kelly then tried to move Mrs Hadley, who struggled with mobility, from her armchair, where her husband grabbed her by the arm, but the pair were unable to move her.
With smoke and flames taking hold, they exited the room to the conservatory but Mr Hadley and Mr Kelly turned back to try and save Mrs Hadley, but they were both pushed back by the heat and flames.
Despite the best efforts of the ambulance crew and her husband, she sadly died. The sparks had set fire to the armchair and she died in the chair.
The flames eventually engulfed most of the house and burnt down most of the roof and caused severe damage to the interior of the property.
Mrs Hadley's medical cause of death was given as fatal burn injuries.
Mr Kelly said he had never experienced an incident like this before nor had he heard about one.
The jury referenced a term called "adiabatic compression" in its conclusion which occurs when a valve is opened quickly and there is a rush of oxygen.
Evidence given by corrosion expert Martin Nichol, who is managing director at Enspec Technology, suggested that the oxygen tank may have exploded from particles in the valve and a faulty seal.
He said the presence of very small particles in a high pressured part of the tank could have created friction, and a static charge, causing the particles to "ignite".
Evidence was also given by David Smith, a health and safety advisor at Flogas, which supplies gas bottles to clients including West Midlands Ambulance Service.
Mr Smith said he and the company - which fills gas bottles with oxygen but doesn't manufacture them - had never heard of such an incident occurring like this before, adding: "We have never seen any issue of sparking."
Both the senior coroner, Zafar Siddique, and jurors expressed their condolences to Mrs Hadley's family.
Mr Siddique said: "I would like to offer the family my upmost and sincerest condolences for the loss of the late Lynn Hadley in the deeply and tragic circumstances.
"It is still very raw as the death only took place in April."