Why does the oil float in water?

Oil floats on water due to differences in their densities. 

Density is a measure of mass per unit volume. When comparing the densities of oil and water, oil is less dense. This means that a given volume of oil has a lower mass compared to the same volume of water. Because of this lower density, the gravitational force pulling downward on the oil is weaker than the buoyant force pushing upward. 

Hence, oil tends to stay on top of the water, forming a separate layer.

Therefore, the correct option is "the density of oil is lesser than water".