Oil for multitools/knives?

Any oil will attract and retain nano-grit. If the multi is stainless, then wash it out with warm water from time to time and make sure it dries properly.

If you really want to 'lubricate' it, then grate the lead from a soft pencil into the hinges. Pencil lead is mainly graphite which is an excellent 'smoother' of steel joints, inc locks.
 
This is probably a dumb question but should I be oiling my multitool? And if so, what should I be using?

3 in 1 as suggested if you actually need oil for lubrication. For this purpose it is conveniently available in spray cans .

If you you dont want to make it too oily then I find WD 40 contains just sufficient oil
 
I use 3 in 1 on the pivots of my Swiss army knives after washing in warm water and fairy liquid and allowing to dry. It helps the action of the scissors especially.
 
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