Thank you for your reply. Yes, you are right. The problem is at the location you marked with an arrow. Please see some more pictures to have a closer look at the damaged nitrile seal.
Real issue is that it not an O-Ring, but rather a quad ring or a flat washer with approx size 1.5 x 7.0 x 2.0 mm (ID x OD X Th). Had it been a standard O-Ring, I would have fixed it by now. Looks like I will have to make one myself.
The brass cone in the hex nut (last picture) has actually damaged the center of this rubber washer / seal.
