According to this article on Priceononmics.com entitled There Are No Truffles in Truffle Oil:
Despite the name, most truffle oil does not contain even trace amounts of truffle; it is olive oil mixed with 2,4-dithiapentane, a compound that makes up part of the smell of truffles and is as associated with a laboratory as Californian food is associated with local and organic ingredients. Essentially, truffle oil is olive oil plus truffles’ “disconcerting” smell.
The article further claims that this is because global warming, deforestation, etc have led Italian and French truffle production to crash:
...the production of black truffles in France to decline from roughly 1,320 tons in 1910 to 32 tons today....
However, I feel a little suspicious as the article also says that "the cost of truffles from places like China and the United States are more on par with ordinary mushrooms in terms of prices" which makes it seem entirely plausible that most "truffle oil" could simply be made from cheaper Chinese and US fungi.