Geomagnetic observatories around the world continuously measure time variations of the geomagnetic field. Long-period (> 3 hours) variations are traditionally used to constrain the electrical conductivity of the Earth’s mantle either in terms of one-dimensional (1-D) or three-dimensional (3-D) conductivity distributions. Recent studies have also shown that vertical transfer functions (tippers) estimated from short-period (< 3 hours) variations at island observatories can constrain the 1-D conductivity distribution of the oceanic lithosphere and upper mantle. This is feasible due to the bathymetry-dependent ocean induction effect (OIE), which originates from lateral conductivity contrasts between ocean and land and leads to non-zero tippers even for 1-D conductivity distributions below the ocean. Thus, proper analysis of island tippers requires accurate 3-D modeling of the OIE, for which so far was performed assuming constant sea water electric conductivity with depth. However, significant changes of electric conductivity with depth in the top hundreds of meters of the water column do occur. In this study we explore – using rigorous 3-D electromagnetic (EM) modeling – to what extent realistic, depth-dependent, oceanic conductivity affects island tippers. The modeling is performed for 10 island observatories around the world in the period range 10 −1 to 10 4 seconds, for which a perceptible OIE on tippers is expected. We then compare the predicted tippers with tippers estimated from the observatory data. We also investigate, again using 3-D EM modeling, the effect of seasonal variations of the oceanic conductivity and to which extent this could explain the observed systematic seasonal variation of tippers. We find good agreement between predicted and estimated tippers for all 10 island observatories. This confirms that tippers at island observatories are mainly influenced by the bathymetry-dependent OIE. Our model studies suggest that for most of the considered island observatories, the effect from depth-varying oceanic conductivity is tangible and exceeds the error floor of 0.025, which usually is assigned to tippers during their inversion. Contrarily, the effects from seasonally varying oceanic conductivity were found to be too small to be worth consideration.