Rabbi Yishmael says that one may not light with tar [itran] in deference to Shabbat because tar smells bad and disturbs those in the house. And the Rabbis permit lighting with all oils for lamps as long as they burn properly; with sesame oil, with nut oil, with turnip oil, with fish oil, with gourd oil, with tar, and even with naphtha [neft ]. Rabbi Tarfon says: One may light only with olive oil in deference to Shabbat, as it is the choicest and most pleasant of the oils.
Naphtha, or neft, is crude oil extracted from the ground, and was a common fuel in several countries in the ancient world. During the Middle Ages it was not used and it was virtually unknown in Europe (see, for example, Rashi on the Mishna that simply defines it as “a type of oil with a bad smell”). It is apparent from the description in the Gemara that not only did they use crude oil that burst from the ground, like the people of Cappadocia that have nothing but naphtha, as described further on in the Gemara; they even successfully refined it.
The Gemara is apparently the first historical source that describes the production of white naphtha, which is one of the products of refining crude oil. Since white naphtha was refined, it would vaporize and burn more quickly, as the Gemara said: White naphtha is volatile. The techniques of refining crude oil first appear in other sources approximately five hundred years after the talmudic era.