Mineral oil is a colorless and odorless oil that’s made from petroleum—as a by-product of the distillation of petroleum to produce gasoline. It’s long been used as a common ingredient in lotions, creams, ointments, and cosmetics.It’s lightweight and inexpensive, and helps reduce water loss from the skin.weet. Also called “liquid petroleum,” “paraffin oil,” and “white mineral oil,” mineral oil has long been used in a number of industries, including biomedicine, veterinary medicine, mechanical, electrical, and industrial.