That sender light wire has to be grounding out against the engine block or the alternator or the frame somewhere. The clue is that it happens when the engine is torqued up.
My old 86 had a really rotten wiring harness and it had the oil light wire rerouted along the firewall to the right side of the car, through the strut tower and down to the alternator area- about like it should have been in the first place.
The replacement is pretty easy- it goes right to the grey 8-pin connector on the firewall. The wire is green I believe. You'll probably need to save the special end at the sender and the pin in the plug. The wire can be cut off near the grey plug and spliced right in. The pins are kind of special.
Good luck!
--
Rob Bareiss, New London CT ::: '87 244DL/M47- 221K, 88 744GLE- 202K, 91 244 181K, 88 244GL 145K

You could re-run a wire, but you may want to do some tests first. I thought it would be a short procedure, but because of all the possible outcomes, it grew quit a bit.


When the key is put in the ON position, without starting, a number of the instrument cluster lights, including the Oil light, should come on. Most of them come on because an artificial test mode directly illuminates them to verify that the bulbs are working, but the Oil light comes on because the pressure switch registers that there is zero oil pressure at that time.


Do these steps, which assume that the Oil bulb itself is fine, since you have seen it illuminate.

FIRST TEST

Put the key to the ON position, without starting, and observe the Oil light. Leave the key in this position and proceed to the appropriate section, depending on what the Oil light does.

SECOND TEST - WHEN OIL LIGHT WAS ON IN FIRST TEST:

Disconnect the wire from the oil switch in the engine block (behind alternator, near oil filter), then follow A) or B), depending on what the light does.
A) If the light now goes out in this second test, you've proven that the circuit from the oil switch to the instrument cluster is working more or less, and that the oil switch is closed with the engine off, as it should be. Re-connect the wire and start the engine. The Oil light should go out in a couple of seconds. If it doesn't, either your engine oil pressure is low, or the oil switch isn't opening as it should when the oil pressure is normal.
B) If the light doesn't go out in this second test, there's a short in the line somewhere between the oil switch connector and the instrument cluster light. This circuit is the black wire that appears on the large grey connector at the firewall. If disconnecting the grey connector makes the Oil light go out, the short is between the grey connector and the oil switch. If it doesn't, the short is between the grey connector and the instrument cluster

SECOND TEST - WHEN OIL LIGHT WAS OFF IN FIRST TEST:

Disconnect the wire from the oil switch and short the wire to a ground point. Proceed to C) or D), depending on what the light does.
C) If the light comes on now in this second test, you've proven that the circuit from the oil switch to the instrument cluster is working more or less, and that the oil switch is faulty.
D) If the light doesn't come on now in this second test, you've proven that the circuit from the oil switch to the instrument cluster is not working - there's an open circuit somewhere. This circuit is the black wire that appears on the large grey connector at the firewall, so you could try shorting it there also. If this illuminates the Oil light, then the open is between the grey connector and the oil switch. If it doesn't, the open is between the grey connector and the instrument cluster.

David

Wait a minute, what's the problem? Is the light always on? Does it not ever come on?

If that wire running from the sender grounds, the light would stay on always.

And you should NEVER NEVER NEVER hit the brake and the gas at the same time with the transmission in gear. NEVER!