When a drop of oil is spread on a water surface, it displays beautiful colors in daylight because of

The correct option is D interference of light
When a drop of oil is spread on a water surface, it displays beautiful colors in daylight because the oil film is only a few nano-meters thick. Some of the light is reflected off the top surface and some the bottom surface. Because the thickness of the oil film is about the same as the wavelength of the light the two reflected rays interfere with each other.