I've heard of this reaction before. For me it has the opposite reaction... it softens and makes my hair curlier unless of course it's overconditioned.
It might be because you have coarse hair? Coconut oil is supposed to help with protein retention, and many coarse haired curlies have issues with protein so maybe that is in the mix.
I've had good look w/ oils in my hair... jojoba, coconut, olive, both on wet hair and dry. The problem is they take a while to absorb and even application is quite tricky so I would have parts of my hair that were left on the stringy side and others that were naked. That is why I now prefer leave-in conditioners which are typically an emulsion of water and oils/emollients.