Vindicator Kaalan at the Sun's Reach Armory wants you to speak to Ayren Cloudbreaker and fly over the Dawnblade reinforcement fleet. Use the Flaming Oil to set the ship sails on fire as you fly and once you land, slay 6 Dawnblade Reservists.
1x Sin'loren sails burned
1x Bloodoath sails burned
1x Dawnchaser sails burned
kill unknown x 6
We've managed to capture Sun's Reach in its entirety. Unfortunately a fleet of Dawnblade reservists is on its way to take back the harbor.
Take this oil and secure a dragonhawk from Ayren Cloudbreaker. You should be able to fly within reach of the ships' sails; once you're close enough, set them on fire.
Land in one of the ships and attack the reservists. With their ship sails on fire they won't be able to mount much of a defense.