Wood-staining fungal pigments have potential uses as colorants for wood and textiles. Traditionally, organic solvents have been used as carriers for these pigments. However, other environmentally-friendly and more readily available carriers must be found. Natural oils have the potential to carry these pigments but have demonstrated color loss over relatively short periods of time, possibly due to oxidation and/or polymerization of both the oils and pigments. The current study examined therapeutic and food grade oils (instead of finishing oils) for their potential to carry draconin red, the pigment from Scytalidium cuboideum. To track color loss over time for treated and untreated pigmented oils, a colorimeter and the CIE2000 L*a*b* color space were used. It was determined that hemp oil was a potential carrier for draconin red, as were flax seed oil and cold-pressed linseed oil when treated with β-carotene as the pigment did not degrade over time in these oils. FTIR analysis was used to determine if oxidation was occurring in the oils and if changes in draconin red could be tracked. Based on the FTIR analysis, oxidation was not likely the cause of color loss in the pigmented oils and the pigment could not be distinguished from the oils in the IR spectra. Finally, SEM was employed to determine if crystal degradation was contributing to color loss. The SEM analysis indicated, surprisingly, that the crystals of draconin red formed rather than degraded over time, so crystal breakdown was also not likely the cause of color loss. Further in-depth chemical studies are needed to determine the mechanism of color loss in pigmented natural oils.