Oil displacement by carbon dioxide injection relies on the phase behaviour of the mixtures of that gas and the crude, which are strongly dependent on reservoir temperature, pressure and crude oil composition.

In high pressure applications with lighter oils, CO2 is miscible with the oil, with resultant swelling of the oil, and reduction in viscosity, and possibly also with a reduction in the surface tension with the reservoir rock. In the case of low pressure reservoirs or heavy oils, CO2 will form an immiscible fluid, or will only partially mix with the oil. Some oil swelling may occur, and oil viscosity can still be significantly reduced.

In these applications, between one-half and two-thirds of the injected CO2 returns with the produced oil and is usually re-injected into the reservoir to minimize operating costs. The remainder is trapped in the oil reservoir by various means.

Under the right temperature, pressure and oil composition conditions, CO2 acts as a solvent, cleaning oil trapped in the microscopic pores of the reservoir rock. This miscible (or immiscible) process greatly increases the recovery of oil from a reservoir compared to the recoveries normally seen by water flooding.