Oil and Fire.

[buzzkill]

When thrown, it is considered lit, so it does more than nominal damage (which occurs even against creatures resistant to fire).

Aside from the fact that I hate the wording "it is considered lit", this is some highly flammable, dangerous stuff. So, should the guy carrying it around be vulnerable to fire? Should he be more vulnerable if he has 15 flasks instead of just one?

I say oil should be used primarily to fuel lanterns. If you're going to use it as a weapon, a self igniting weapon, which is a bit of a stretch IMO, then there should be a considerable downside to it. Considering the fragility of inventory items versus elemental attacks, vulnerability to fire, in some way shape or form, should be that downside.

[Derakon]

The main issue here is that player branded attacks have to have some base physical component against which the brand is applied; you can't have a weapon deal full damage against fire-vulnerable monsters and no damage against fire-resistant monsters.

That said, I'd say that the text should just be "When thrown, it is automatically lit and can burn enemies". Gloss entirely over the fact that you can still deal some (entirely negligible) damage to fire-resistant enemies, since there aren't any in the range where you'd consider throwing oil.

The drawbacks to using oil as a weapon: it's heavy, it's short-ranged, and the classes that would need it as a weapon aren't very good at throwing (pretty much requiring ?Bless to make adequate use of it). I think that's sufficient.