3 things combine:
1. Oil is much hotter than the boiling point of water
2. Water is denser than oil
3. Water expands something like 2700 times when it boils.
So you have water sinking in the oil, boiling as it sinks and expanding 2700 times.
Adding oil to boiling water just raises the temperature of the oil a little bit. It can sit above the boiling water just fine.
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