Systems and methods to improve the removal and capture of oil from wastewater streams. The water and oil mixture (wastewater) is diluted and treated to provide better solubilization of hydrophilic and hydrophobic fractions using captive water and a diluent. Two additives are added to demulsify and disperse polymeric and non-hydrocarbon insolubles and layer separation is performed on the treated wastewater to segregate oil and water.