You have to hunt down specific buddies that drop the oil
HOW TO GET HIGH QUALITY PAL OIL [QUICK AND EASY FARM] in PALWORLD
In Palworld, you'll use high-quality Pal oil to craft mid- and late-game items, such as weapons, polymer, and advanced assembly lines. You won't really find a lot of high-quality Pal oil in the starting areas — you have to advance towards the harder parts of the map to farm the oil.
Below we explain where to find high quality Pal oil in Palworld.
You can get high quality Pal oil as a drop from these Pals: