It is also used as a lubricant and a cutting fluid. Light mineral oil is also used in textile industries and used as a jute batching oil. An often cited limitation of mineral oil is that it is poorly biodegradable; in some applications, vegetable oils such as cottonseed oil or rapeseed oil may be used instead.aby oil is a perfumed mineral oil. Most often, mineral oil is a liquid by-product of refining crude oil to make gasoline and other petroleum products. This type of mineral oil is a transparent, colorless oil composed mainly of alkanes and cycloalkanes, related to petroleum jelly.