SOURCE: Low oil pressure light coming on
SOunds like your oil pressure sending unit. It is right by the oil filter.
SOURCE: oil pressure drops once it gets warm
Sorry to say it sounds like the motor is gone. Higher oil pressure when the oil is cold is normal. But, when the engine gets to operating temp and the pressure bottoms out and the engine knocks you have big problems. If the mileage is very high (150,000) or more your bearings are so worn that the oil can't fill the void between the surfaces and thus the low oil pressure.
SOURCE: 1991 chevy S10 blazer fluctuating oil pressure
I assume from the year it has high mileage. With mileage comes wear in these engine's bearings allowing oil pressure to drop because of the excess clearance between cam and bearings, also the crank and bearings. When the engine is hot and idling the oil is thinner and goes by the bearings quicker. If you have good oil pressure while driving, I'd leave it alone, maybe use a thicker oil or some lucas additive. My 89 does the same thing sometimes in the summer, but don't remember it doing it this summer. I use Mobil-1 and an AC Delco filter.
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SOURCE: 1996 oldsmobile aurora oil pressure
The Aurora is a low pressure oil system. The only solution available at this time is to increase the oil weight. I went o straight 30W to solve the idle alarm issue. Some use 20W oil and that works too.
With 20W you will be at 80 to 90psi cold then drop to 20-30psi hot.
I first replaced the oil pressure gauge and it was worse. I put the original back in and it was better. Then went to 30W and all is fine.
Running it that way for a few years now.
SOURCE: Dodge 2.7 I'm losing oil
The first stop is to measure the pressure with an external gauge. if the readings are the same, surgery is needed, I would look at the oil pressure relief valve for foreign particles.
It takes resistance to make pressure, and your decsription does not sound good. If the pressure is actually dropping, and you find no issues with the oil pump and pick up, you need to measure bearing clearances... Essentially, everywhere oil is pumped needs to be inspected...
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