This issue seems to come up at least once a month or so around here. I wouldn't use regular oil on it (it can soften the leather, and if it's animal or vegetable oil can turn rancid), but mineral oil doesn't seem to bother it much. Other people use things like Renaissance Wax. But you know, honestly, nobody pampered the handles too much when they were being used in combat, and the leather on most of those knives has survived just fine.
In a nutshell: Use your knife, enjoy it, and don't worry too much about stuff like this.