by2, I have a Pal 36 as well. From that era the knife would be close to 70yrs.. For a knife of that age leather aging would be normal. If the gap is over 1/16" I doubt Neets Foot oil will take the wobble out. So, that means knocking the pommel pin out and adding a leather disc, like ^ he said. It's not a big deal but if you've never done something like this before. It requires some thought, planning a vise and basic tools.
Once you knock the old pin out you'll probably have to go back with a new pin. The pommel on mine is aluminum. A stainless rod at a hardware store could match. I used a nail as it was handy. It looks to be 1/8". You'll want it to look original. So, after cutting the leather to fit, press it back on tight. Sand it. Then I would use a coat of Neets Foot oil to blend it in. This won't soften it as much as you think. The sheaths weren't so good on those models either. It probably needs a new one as well. Then you'll have a good 6" knife with some history. That blade could have been used to help a soldier in time of need. Good luck, DM