That is what's called a "weep hole". They are there to let you know when you have a leak.
If you are seeing oil come out of it, it is doing it's job. You need to replace the seal at the top of your lower unit.
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BTW, that prop looks a little rough. You been grinding on it? Something with that much leading edge issues could be out of balance. That is hard on seals, bearings, etc.
Yeah, I once had a late 80s Mariner, 75 hp. And I went in there not knowing. Thankfully, I had a magnet that helped me round up those damn loose steel balls. Needless to say, I was woefully unprepared for the initial discovery.
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Except in vocabulary, I always seem to have the perfect words for when things go wrong.
I’m debating if I want to tackle it myself. One shop quoted me ~$60 in parts and ~$350 in labor. Which all seems fair. So I just need to weight the risk/reward of my son learning some new colorful words that I will have to explain at daycare.