Dan
Hello & Welcome to the Forum!
Wow!
What a wonderful locomotive to inherit from your grandfather.
When the locomotive was produced  light oils such as 3 in 1 or sewing
machine oil, 30 weight car oil,white petroleum or automotive grease
would have been common lubricants.
You can purchase lube sets at hobby shop's. Labelle's offers a set.
l us Mobile 1 Synthetic oil, a quart 5 to 7 $, Enough to almost lube
a train for a lifetime. For grease, l use LGB grease, but you can use
any plastic compatable grease. Please share photo's with use when you get it on the track.


https://www.tandem-associates.com/lionel/lionel_trains_681_loco.htm



Happy Rails.
dave