Oil finishes provide very little moisture resistance. This is because oil finishes (boiled linseed oil, 100% tung oil and mixtures of oil and varnish, often sold as Danish Oil) don’t get hard, so they can’t be built up on the wood to provide a thicker moisture barrier. You have to wipe off all the excess after each coat.
If you drip some water on an oil finish, the water will penetrate quickly and raise the grain of the wood, causing a smudge mark like the one pictured. If you live in a relatively humid area (not the desert), the surface that you have prepared so well will become rough as the grain is raised by moisture vapor (humidity) penetration.
To reduce the smudging and rough feel, you should raise the grain of the wood and sand it off before beginning to apply the finish.
Wet the wood with a wet cloth, and let the wood dry overnight. (On dry days, you might be able to go to the next step after several hours, but overnight drying is best.)
The grain will be raised making the wood feel rough. Sand the wood smooth using the finest grit sandpaper that does this efficiently—for example, #220-#400 grit. You want to sand as little below the raised grain as you can or you won’t have achieved anything. Water will just raise the grain again.
Once the wood is smooth to the touch, apply the finish as normal. If you have done the sanding well, moisture or moisture vapor penetration will have little further grain raising effect on the wood. It will continue to feel smooth and smudges won’t show nearly as badly.
This procedure has the same grain-raising resistance for wax finishes that are applied directly to the wood—that is, no hard-drying sealer coat applied underneath the wax.