If a plant is covered in a lot of oil it will probably die because most plants "breathe" through the stomata in their leaves (tiny holes). The plant needs to be able to take in Carbon Dioxide. Also plants take in some water through their leaves and would not be able to do so if the oil is in the way.
Some pesticides, especially organic ones, use a small amount of light oil to discourage the pests but, it is light enough to still allow the plant to take in CO2 and water.
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