After buying, selling, cleaning, labeling, and hotstamping and obsessing over dozens of sets for myself and others here's my thoughts on oiling chips:
1. The only oil that should even be considered for this is straight-up mineral oil you get from the drug store. It's odorless and tasteless. If it smells like baby oil then it's Baby Oil and you bought the wrong stuff. Take it back.
2. Oiling is to bring the color out. If it's already "out" then don't bother. If it's a chip that really can't benefit from oil don't bother. I'm talking about new Paulsons, new BCC's, China clays, ceramics (yes, people have mentioned they're going to oil their ceramics believe it or not) or cheap plastic chips.
3. There's only two chips I've seen benefit from oiling: chips that have gone through a thorough cleaning like old paulsons or ASM/CPC's or brand new ASM/CPC's that are new with the edges turned.
4. DO NOT OVER OIL. The only thing you need is a tiny bit on a rag to rub the edges. That'll transfer to the face of the chip with players' fingers over time. You don't need to: soak them, use some type of applicator to paint oil onto them, etc. Just a tiny bit rubbed on the edges, then wipe away the excess. Done. If you put too much oil on chips they'll do something nasty: they'll "leak" oil forever and you'll be constantly wiping it off, players will complain, and they'll stick together. Oil can also damage inlays on older chips. If you use any more than 1/10th of your bottle of mineral oil from the drug store you're doing something wrong.