This thesis aims to develop a computer simulation of the process that occurs when one displaces a viscous fluid such as oil by a less viscous one such as water in a porous medium. Chapter 1 outlines the problem and explains why a computer simulation rather than analytical treatment is necessary for the problem. Previous computer simulations of the problem are reviewed and their respective advantages and disadvantages are considered. Chapter 2 introduces the concept of 'simulated annealing', a stochastic computational technique for solving minimisation problems with many variables and this technique is used to make a crude model of the displacement problem. The results from this are considered and the reasons for the model's failure to adequately solve the problem are discussed. In chapter 3, simulated annealing is applied to the simpler problem of the travelling salesman where one has to find the shortest route around a collection of points. The aim of this chapter is to try and find an optimum simulated annealing schedule to minimise the computer time needed to achieve a satisfactory solution. This is successfully accomplished for this particular problem by fitting the relaxation time of the system as a function of temperature to an Arrhenhius type law. But this optimisation is problem specific and it is concluded that the complicated nature of the oil displacement problem effectively precludes treatment by annealing. In chapter 4 a stochastic micro model is developed in which a pressure gradient across the system forces water into oil bearing pores. The pores have varying sizes which represent sizes which represent the varying permeability in a porous medium. A modified Gauss Seidel method is used to solve for the pressure field and an analytic expression for the saturation update is developed. The final chapter, chapter 5, develops the above model further and in particular develops a scheme whereby conservation of fluid is guaranteed. The profiles of the fingering of the water into the oil are studied and it is found that their interface fractal dimension varies monotonically with viscosity ratio.