Light Oil is a petrochemical liquid product produced when processing Medium Oil in the Distillation (Stage II). It can be further processed in a Distillation (Stage III) machine to produce Naphtha and Fuel Gas. Alternatively, it can be burned in a Boiler (Gas) to generate Steam (High) , and thus generate Electricity.
Burning Light Oil directly to create steam is a viable option before Naptha Processing is researched. However, using a distillation stage III machine to separate Light Oil into Naptha and Fuel Gas and then burning the two products separately produces significantly more energy than burning the Light Oil would.
Below are all the recipes, which contain this item. Note, that some of them may be locked behind Research, and not immediately available in your game.