[porcupine73]

It is almost certainly the inline oiler. Does it have any adjustment? Any oil entering the tool has to go somewhere....yes some stays in on the vanes etc but oil in=oil out the exhaust. I use a lot of air tools but I just oil them before use rather than the inline oiler. If I have an issue with oil spray, I wrap a shop towel around the exhaust while I use it to catch the excess oil blow through. Typically, air tools say you should get a fine mist of oil on a sheet of paper held near the exhaust.