# Phenol or ethanol as a nucleophile for ether formation?

If we react phenol with $\ce{C2H5I}$ in $\ce{C2H5O- Na+}$ (excess), $\ce{C2H5OH}$ (anhydrous) solutions .

In this reaction why is diethyl ether not formed and the actual product is phenyl ethyl ether?

You are adding excess sodium ethanolate so there is the possibility of deprotonation of phenol: $$\ce{C6H5OH + C2H5O- <=> C6H5O- + C2H5OH}$$
If we look at the $\text{p}K_\text{a}$ of ethanol and phenol we have 16 and 9.95 respectively and so the equilibrium above will strongly favour the right hand side. Therefore, the phenoxide ion will dominate as a nucleophile in the mixture, and the major product will be ethyl phenyl ether.