Currently, oil will shrink away slowly from existence. The problem is that it's still active while doing so, and can catch fire or poison things if it's the poisonous variant. This can happen even if the oil has shrunk so small that it is no longer visible.
Oil should cease to exist the moment it starts shrinking. The effective lifespan doesn't necessarily have to shorten, but catching fire from something invisible is just shullbit.
Does it? On the day of the fire poison danger room, I noticed I don't get poisoned the moment it starts to shrink, even if it still appears to be on screen.