The pollution of land and water by petroleum compounds is a matter of growing concern necessitating the development of methodologies, including microbial biodegradation, to minimize the impending impacts. It has been extensively reported that fungi from polluted habitats have the potential to degrade pollutants, including petroleum compounds. The Red Sea is used extensively for the transport of oil and is substantially polluted, due to leaks, spills, and occasional accidents. Tidal water, floating debris, and soil sediment were collected from mangrove stands on three polluted sites along the Red Sea coast of Saudi Arabia and forty-five fungal isolates belonging to 13 genera were recovered from these samples. The isolates were identified on the basis of a sequence analysis of the 18S rRNA gene fragment. Nine of these isolates were found to be able to grow in association with engine oil, as the sole carbon source, under in vitro conditions. These selected isolates and their consortium accumulated greater biomass, liberated more CO2, and produced higher levels of extracellular enzymes, during cultivation with engine oil as compared with the controls. These observations were authenticated by gas chromatography-mass spectrophotometry (GC-MS) analysis, which indicated that many high mass compounds present in the oil before treatment either disappeared or showed diminished levels.