Oil on the exhaust manifold or blue smoke spewing out of the tailpipe is commonly caused from a compromised gasket or cracked exhaust manifold. The head gasket is the main seal protecting the engine cylinders from engine oil. A compromised head gasket or O-ring will allow oil into the cylinders and exhaust manifold piping.
The exhaust manifold is secured directly to the individual engine cylinder ports. Exhaust gases expel from the combustion chamber into the exhaust manifold before moving towards the tailpipe. There must be an airtight seal between the manifold pipes and the cylinder ports.
Blue exhaust smoke may be coming from your tailpipe. Blue smoke indicates oil in the cylinder ports and then exhaust manifold -- a sign that a gasket or O-ring protecting the cylinders from oil has failed.
Oil commonly enters the inner portion of the exhaust piping after leaking through the cylinder ports but it is possible for oil to find its way onto the external portion of the piping. This occurs one of three ways: a crack in the manifold piping, a compromised exhaust manifold gasket or a blown oil seal. In any case, an engine oil seal has failed.
