Internal oxidation can achieve significantly enhanced J_c in Nb₃Sn wires, but the mechanism of oxygen transport and oxide precipitation is not fully understood. Our investigation employs X-ray Absorption Near-Edge Structure (XANES) spectroscopy, revealing insights into the oxidation of Zr and its interaction with oxygen in different areas of the wire cross section. We discovered that in samples reacted at 650°C the majority of Zr in the Nb₃Sn layer is oxidized as ZrO₂, whereas it predominantly remains non-oxidized within the residual alloy. This is an interesting finding especially for samples where oxygen has to diffuse first through the entire layer of Nb alloy to reach the regions where Nb₃Sn will form. The onset critical temperature (T_c) of the residual Nb alloy was the lowest in such samples, most probably due to a higher content of interstitial oxygen resulting from the diffusion gradient. This report adds to existing indications that ZrO₂ precipitates in superconductors employing internal oxidation are only located within the Nb₃Sn layer and opens new avenues of research on the formation of this precipitates.