Hopefully this gets sticky'd. There seems to be some debate over WHERE the oil comes from. I'm here to settle this once and for all, as I am tired of replying over and over again to this simple problem that anyone can repair very easily.
First of all, many DOHC engines have spark plug well seals. This, however, is not the case on the 87-92 7M engine.
Please refer to my custom diagram. When it says (color, shape) that is what I'm talking about. Pretty straight forward.
Go buy a 14mm allen head socket from napa. Take the No.3 cyl head cover off and throw it into the garbage. Now divert your attention to my shitty diagram:
If you have oil here (green arrows) then it is possibly coming from 2 places. Everyone says, "It's coming from the valve cover gaskets" (red boxes) which, I too thought when I was new to supras. So I replaced the valve cover gaskets, yet the oil was still "appearing" in the spark plug gallery. Not as much as before, but it was still appearing. No track marks from where it was coming from, just a puddle. It was very frustrating. I then discovered (through no help of any forum, they all said it was valve cover gaskets) that the No. 3 cylinder head cover BOLTS (yellow circles) were leaking. They are 14 mm allen head. You can A. Go to the dealer and get a new No.3 cylinder head cover (its a cover AND a gasket all in one, bad design) or B. bring 1 of your 14mm allen head bolts to an auto parts store and match up an oil drain plug gasket that fits. That's what I did, I used red ones (yellow circles), cuz it matches the red lines on the valve covers.
Hope this helps.