Physics, not chemistry.
When light hits the oil (which sits on top of the water), some of it reflects and some of it bends and continues. By “bends” I mean changes direction, the effect that makes a pencil inserted into water appear broken.
When the bent light hits the water, more of it reflects upwards.
When it hits the oil/air transition the second time, it bends again.
The result is that a beam of light entering the oil becomes a cone on the way out.
[Diagram](https://media.hswstatic.com/eyJidWNrZXQiOiJjb250ZW50Lmhzd3N0YXRpYy5jb20iLCJrZXkiOiJnaWZcL29pbC1maWxtLmdpZiIsImVkaXRzIjp7InJlc2l6ZSI6eyJ3aWR0aCI6MjkwfX19).
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