The Portuguese rider came from seventh on the grid to take the lead on lap five of the rain-hit maiden MotoGP race at the Mandalika International Street Circuit.
The race was delayed for well over an hour due to heavy rain, while problems with the asphalt in the extreme temperatures led to the grand prix being shortened from 27 to 20 laps.
Once out in front, Oliveira quickly built up a lead of over four seconds by one stage, before managing a late charge from Yamaha's Fabio Quartararo to claim his fourth win of his MotoGP career.
Oliveira has endured a torrid time since his last podium in Germany in July of 2021, scoring just 21 points in the previous 11 races, four less than he scored with his Indonesia win.
"I mean, emotionally it was a rollercoaster," Oliveira said in parc ferme. "The start was perfect but then in the wet it's so hard to judge where the limit is.
"So, I followed Jack [Miller] for a couple of laps and then I understood I could still go a bit faster, so when I overtook him I just tried to focus on the next five laps and do the maximum that I could.
"Then I built the gap and was just managing throughout the race. But it was not easy, the last couple of months have not been easy for me.
"So, to be back like this with this incredible win is for sure really emotional.
"I promised my daughter I'd get her a trophy from Indonesia."
Oliveira's win follows on from teammate Brad Binder fighting for victory in the dry and finishing second in the opening round in Qatar, while the South African claimed his best MotoGP qualifying result of fourth on Saturday at Mandalika.
Despite KTM's evident turnaround in form at the start of 2022, Oliveira is reticent to declare himself and the Austrian marque as title contenders right now.
"I mean I think it's very early to say because we only had two races," Oliveira, who started his 50th MotoGP race on Sunday, added.
"For sure, we want to keep this strong condition going into other races as well.
"We don't just want to perform three times or four times during the season and be average.
"We want to be up there more often, we are aware that we need to work really hard.
"That's the normal of this category, everyone is so close together and you see the difference sometimes it makes being in the Q2 or not.
"It can turn your whole weekend around. So, we are focusing on being fast first of all and then being consistent in the races and scoring points."
