The Sakurajima update brought new elements: we have the Medal Merchant who exchanges Dog Coins for items, and we also have Crude Oil. While you can go to certain locations to find Crude Oil in small quantities, players can also build farming bases to get a consistent supply.
Palworld: How to build 2 crude oil extractors on one oil node – Sakurajima Update
Crude Oil can be found mainly in the northwestern part of the Palworld map, near the Mushroom Wetlands, Dancing Sakura Shrine, and a few spots near the Northern Rock Field. They are visible here as brown spots; more spots may be added in the future, but for now this is the only location on the island where you can find this resource.
In addition to collecting oil here, you can also get it as a drop from Pals like Kikit and Sootseer. If a Kikit is in your party, his Rollin' Full Oil partner skill will help reduce the weight of Crude Oil in your inventory.
Finally, you can go to Sakurajima Island and find chests/boxes containing various supplies, including crude oil.
