Oxford was expected to join Forest today, but Reading have shown an interest at the last minute.
The England youth international may now opt to join the Royals, who are competing for promotion in the Championship.
Forest believed that they had beaten off competition from Glasgow Rangers to sign the youngster.
However, Reading now appear to be hoping to snatch Oxford away from Forest’s hands at the last minute.
The Royals have not been particularly active in January so far, but Jaap Stam is eager to bolster his squad, as his side challenge for a play off spot.
Forest, meanwhile, were believed to want Oxford as they look to pull away from the relegation zone.
Oxford has barely featured for West Ham so far this season, but he did make seven senior appearances last time around.