Answer : The correct option is, Oxygen was reduced over the course of this reaction.

Explanation :

Iron rusting : A chemical process in which the an iron nail react with water and oxygen to give iron oxide as a product. Rusting of iron is an oxidation-reduction reaction in which iron losses electrons to oxygen atom.

Oxidation reaction : A substance looses its electrons. In this oxidation state increases.

Reduction reaction : A substance gains electrons. In this oxidation state decreases.

The balanced chemical reaction for rusting of irons is,

4Fe(s)+3O_2(g)rightarrow 2Fe_2O_3(s)

Half reactions of oxidation and reduction are :

Oxidation : Fe(s)rightarrow Fe^{3+}+3e^-

Reduction : frac{1}{2}O_2+2e^-rightarrow O^{2-}

From this reaction we conclude that the electrons are getting transferred from iron to oxygen.  That means in this reaction, oxygen is an oxidizing agent and iron is a reducing agent.

Hence, the correct option is, Oxygen was reduced over the course of this reaction.