Have you got a part number or a pic of it you can post? Sounds like either a oil light sender or a funny earth/electrical contact through the thread of the sender. Have you used teflon tape (or similar) on the threads? That can cause conductivity issues. Not telling you how to suck eggs, but have you checked all the simple stuff like wire condition/chafing/shorting on firewall etc?
Can quickly test the gauge by popping the wire off at the sender and shorting it to earth with the IGN - ON. Should head straight to high. If it doesn't it may have a gauge issue.
Regards,
Dave.
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