Why is my handle wood splitting after I oiled it?

Those cracks probably aren't from the mineral oil itself, more likely they were already in the wood and are just opening up as the handle moves around. Dark hardwoods like ebony or dyed wood often show this, especially if the piece dried out in a shop or moved to a drier climate in your house. Wood expands and contracts with humidity and small checks along the edge of the handle are pretty common on handmade knives.

The bigger issue is that mineral oil never actually cures. It just sits in the wood, so it conditions it but doesn't seal it. That means the handle keeps soaking up oil and giving off moisture, which can make existing cracks more visible and keep them creeping. Oil helps keep the wood from drying out further but it won't stop movement on its own.

If the cracks are still hairline, a couple drops of thin superglue wicked into them will fill and stabilize them, then you can level it with fine sandpaper and the repair basically disappears. Lots of makers do exactly that. Once that's done, give the whole handle a light sanding to knock down any rough spots. For a real finish, you want something that cures hard instead of staying oily. Tung oil or boiled linseed oil are the usual choices for wood handles, applied in thin coats and wiped off, with a few days between coats. Some folks finish with a coat of wax on top. That gives you a sealed surface that won't keep drinking oil forever. Just skip anything with a thick film like polyurethane if you plan to actually use the knife, since it can chip around the pins.

Also worth a message to the guy who made it. A smith with two decades of experience will know exactly what wood he used and how it was sealed before it left the shop, and most are happy to touch up a handle for you.

One thing I'd add from my own experiance with an olive wood handled knife is that placement in the house mattered more than anything I put on the wood. Mine sat on a shelf right above a heating vent and the checks got noticeably worse within a week, then basicly stabilized once I moved it to a drawer on the other side of the room. Before you commit to any finish, maybe try just relocating it for a couple weeks and see wether the cracks keep growing. Also curious whether they run with the grain or across it, since that tells you a lot about whether it's movement or something the wood did while drying.

That bit about the oil never drying up explains a lot. I kept re-oiling an old kitchen knife handle for months and wondering why it always felt slightly sticky afterwards. Switched to a hard drying wood oil and it finally stopped drinking the stuff. Question though, when you glue the hairline cracks, does the repair stay visible if the wood is really dark, or does it blend in once you sand it back?

On the glue question from earlier, I've done this on a cocobolo handle. The CA soaks in and dries clear, but on really dark wood it can leave a slightly glossy spot that catches the light. What worked for me was sanding it back with 600 grit, then hitting the whole handle with oil so everything had the same sheen instead of just the patch. You can still find it if you're hunting for it, but nobody notices in hand. Also, don't flood the crack with glue. A drop on the edge and capillary action pulls it in. Pile it on and you'll be sanding forever.

Agree with the suggestion to message the maker. I had a similar thing happen with a walnut handle a few years back and the guy who made it just told me to bring it by. He sanded the checks down and hit it with a fresh coat of oil while I stood there chatting, took maybe fifteen minutes and it looked better than the day I picked it up. Most of these guys take real pride in thier work and would rather fix it than have you guessing at it yourself.