Less than 10% of oil is usually recovered from liquid-rich shales and this leaves much room for improvement, while water injection into shale formation is virtually impossible because of the extremely low permeability of the formation matrix. Injecting carbon dioxide (CO₂) into oil shale formations can potentially improve oil recovery. Furthermore, the large surface area in organicrich shale could permanently store CO₂ without jeopardizing the formation integrity. This work is a mechanism study of evaluating the effectiveness of CO₂-enhanced oil shale recovery and shale formation CO₂ sequestration capacity using numerical simulation. Petrophysical and fluid properties similar to the Bakken Formation are used to set up the base model for simulation. Result shows that the CO₂ injection could increase the oil recovery factor from 7.4% to 53%. In addition, petrophysical characteristics such as in situ stress changes and presence of a natural fracture network in the shale formation are proven to have impacts on subsurface CO₂ flow. A response surface modeling approach was applied to investigate the interaction between parameters and generate a proxy model for optimizing oil recovery and CO₂ injectivity.