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Knows a couple things...
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It's the sending unit going out. The early TJ's like mine have a real oil pressure gauge the later ones read in one of 3 positions I believe. Get a new sending unit unit from the dealer and throw it on there.
That "from the dealer" bears repeating... senders/sensors from anywhere else but the dealer is like throwing the dice, most aftermarket sensors from stores like Autozone are from China and not worth the $$$ or effort to install. I had to install an oil pressure sender into my son's Grand Cherokee on a Sunday when the dealer was closed and it took three different senders from Autozone before I finally got one that worked properly. One of Autozone's senders actually worked backwards... it indicated high oil pressure at idle RPMs and showed lower pressure at high engine RPMS. :facepalm:
 
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