From this distance, that looks like chemical damage. More specifically, it is oil (from a leak?) on PVC insulation. It somehow leaching out the plasticiser out of the insulation and the insulation becomes brittle and crumbs away.
It will probably be confined to the ends of the wires (assuming that’s as far as the oil went). A reasonably good fix would be to remove a pin from the connector (using the proper pin-extraction-tool) and sliding a piece of heatshrink tubing over the problem area, then reinstall that pin (so it goes back in to the correct hole). And repeat for each pin. It’s not a perfect repair, but much better than taping it. Also, glue-lined heatshrink will help protect the actual copper conductors for further chemical issues, but it might also make the loom too stiff?
New engine loom would be idea, if they are available and not stupidly expensive. But I’d be fixing those oil leaks before investing the time and money in to replacing the loom.
Yeah it‘s probably oil that’s damaged the wiring but I thought i’d keep it broad since there are lots of chemicals used around engines. For example ethyl glycol can corrode silver plated connector pins which is yet another issue…
The fact the oil can be wick some distance along a wiring loom also means that the degradation can occur mId loom and not just at the connector ends. This means one could be chasing odd, intermittent and strange system faults for a not so visible wiring problem, even after fixing the wiring near connector ends. It can become frustrating and a real PITA very quickly.
To determine how bad the oil damage may be within the loom requires some effort but it’s effort well spent so one can gain confidence in any proposed repair. If the oil has indeed soaked some distance into a loom, then replacement may be the best solution (but costly) if one actually wants reliability long term. Obviously fixing the root cause goes hand in hand with any repair.
In part that’s why I’ve always hated and addressed oil (any fluid really) leaks with urgency because of the problems they can cause to wiring (though the fact it upsets my clean engine bay ocd may play a bigger part
)
At the end of the day it’s for Paul to determine how bad the oil spread may be and find a solution within his budget