The best way to say 'The oil is leaking' in Spanish is the following:
'Mi coche (auto) pierde aceite'
The vocabulary we use is:
Mi: (Pronoun) My
coche: (noun) car (notice: use the word 'coche' in Spain and 'carro' or 'auto' in the spanish-speaking countries of America)
pierde: (verb) to lose
aceite: (noun) oil