Can oil be used instead of water in preparing wet mounts for microscopy?
Typically wet mounts are used to observe the mobility and behavior of microorganisms. A classical use for a wet mount would be to study something like pond water were you could see all the different organisms swimming around like they would in their natural environment. Oils are more viscus and would impede mobility and might impact behavior or even be toxic to the microorganisms.

If you were an olive oil manufacturer, and you thought you had some odd microbial contamination of your olive oil you might look at a drop of your olive oil between a slide and cover slip thus using an oil based wet mount like you are describing. You might also do this if you were studying the microbiology of an oil spill in water.

There is nothing saying you could not suspend a sample in oil. There may even be a unknown benefit of using this method in certain circumstances, that is waiting to be discovered.