The Collaborative International Dictionary of English v.0.48:

oiled \oiled\ (oild), a.
   1. Covered or treated with oil; dressed with, or soaked in,
      oil.
      [1913 Webster]

   2. Drunk; inebriated. [slang]
      [PJC]

   Oiled silk, silk rendered waterproof by saturation with
      boiled oil.

   well oiled,
      (a) operating smoothly and efficiently.
      (b) very drink. [slang]
          [1913 Webster +PJC]