The official GemStone IV encyclopedia.
Repelling oil will bestow a defensive bonus against undead foes when applied to armor or shields. The level of the oil will determine the amount of the bonus.
Flared armor will not be able to take the repelling oil. With the August 2017 update to padding, repelling oil should be usable on padded armor (needs confirmation).
Minor repelling oil
Minor repelling oil adds 10 to DS against undead foes for 10 swings.
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Greater repelling oil
Greater repelling oil adds 30 to DS when rubbed on an armor or shield for ?? swings against undead.