If the oil you apply is of the type which prevents water from reaching your skin, then you have to remove it for ablution. However, most oils are eventually absorbed and or dried out. Perhaps the best thing to do is to have ablution before you apply the oil, which may enable you to have your first prayer without having to have a fresh ablution. By the time the next prayer is due, the oil would have been absorbed or dried.
(Source: Arab News) Classified in Ablution and the use of oil on skin >