Belt drive contamination with oil is never beneficial, but sometimes cannot be avoided. While occasional contact does not generally have adverse effects, prolonged contact with oil type lubricants, either directly or airborne, causes rubber compounds to soften and swell. Adhesion systems internal to belts are also weakened and broken down. This ultimately results in significantly reduced belt service life.
V-belt drives rely exclusively on friction to transmit power, so any contaminants that reduce friction also reduce the ability of the belt drive to transmit power. Banded type V-belts might have slightly improved resistance, compared to "raw edge" or "cut edge" type V-belts, with the outside cover temporarily shielding internal components. Also, neoprene based V-belts will have greater resistance to oil than EPDM based V-belts.
Synchronous belt drives rely less on friction to transmit power than V-belt drives. They also tend to perform better in oil contaminated environments. Rubber based synchronous belts, however, are still susceptible to swelling and adhesion system breakdown over time. While alternate rubber compounds may provide some marginal improvement in durability, it is best to prevent oil from contacting rubber synchronous belts if possible.
Gates Poly Chain type belts use a urethane based construction that is quite resistant to oil contamination. This prevents material swelling and breakdown that cannot be avoided with rubber materials. Note that synchronous belts still rely on friction to transmit power, so lubrications will interfere with power transmission. Poly Chain GT Carbon belts are used successfully in environments with heavy misting of oil based lubricants and cutting fluids, and have even been submerged in oil. Poly Chain GT Carbon belts are the best bet for applications that cannot avoid oil contamination.