Blood Oil

Blood Oil is an raw material that can be found in the Blood Kelp and Blood Kelp Caves biomes. They grow on the lower part of the plant stem and can be harvested by the player without any tool.

It can, also be spawned using the command "Item BloodOil".

Speculation
In the future this will be harvested from the stem of the blood cave roots. It will also be able to be picked up from the ground in the blood kelp zone. They will randomly fall from the tall blood kelp stalk.