One may use any type of oil or wick for the Ĥanuka candles, including those that are unusable for Shabbat candles. This is because the purpose of Shabbat candles is to illuminate one’s home, and if they do not burn nicely, there is a concern that one may manipulate a candle to improve its light and thus desecrate Shabbat. Therefore, the Sages prohibited lighting Shabbat candles with oils and wicks that do not burn well. In contrast, one may not use the light of the Ĥanuka candles, so any type of oil or wick that can stay lit for half an hour may be used.
The more beautifully the candle burns, the more beautiful the mitzva is, because the miracle is publicized more effectively. Therefore, many people light wax or paraffin candles, whose flame is strong and beautiful. Many Aĥaronim write that it is even better to light with olive oil, because its light is lucid and it also recalls the miracle of the oil.6
The Ĥanuka candles must contain enough fuel to last for half an hour, because the Sages prescribed that we light from the end of shki’a until people are no longer walking around in the marketplace, or about half an hour. And even when one lights indoors, the candles must be able to last for half an hour. If one has only a small amount of oil or a small candle, which will burn for only a few minutes, one should light it without reciting a berakha.7

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based on ruling 82031 of the Eretz Hemdah-Gazit Rabbinical Courts
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