From Greek Ο[O:omicron]ί[ì:jóta]>Οί Oì; into
Latin where it realizes as Oe.
In wordes of Greek orgin: Oedipus, oeconomia.
According to the sound we say: Ödípus and ökónómía by traditions.
That is why for sake of euphony:
Icelandic scholars could have modified [or constructed]:
bóndi > bændur[bóndar], góður > gæðir[/góðir] sóma>sæma, blóða>blæða
fóddi>fæddi .....
blás >blæs, Sáða> sæða, gás <gæs, gár>gær ...
oe and ae I consider literary or etymological notations including
same sound aí=æ.
Soeði comes from sóði.
but Saeði comes from sáði.
In latin
we have: ar, er, ir, or, ur. 5
in old-Icelandic you count the basis.