The Oil Slick function is something KITT could spray a thick layer of oil out his Oil Jets to cause pursuing cars to slip off the road.
("Knight of the Phoenix")
In "Knight of the Phoenix", the Oil Jets were activated by a button on KITT'S arm rest panel. But this was probably done so that actor Barret Oliver (Buddy) could easily reach it. The button was labeled "Oil" in Season 2 and was labeled "Oil Slick" in Season 3 and 4. Oddly enough, Michael only referred to KITT'S Oil Slick as Oil Jets.