Accumulation of water in large diesel storage tanks due to climatic differences poses significant operational challenges, including potential contamination of tanker deliveries and the growth of harmful microbes leading to filter blockages and vehicle malfunctions. To mitigate this issue, we focus on the synthesis of biodegradable surfactants capable of emulsifying free water to form stable emulsions. Among various classes of biodegradable surfactants tested, oleic acid diethanolamide emerged as a promising candidate due to its superior emulsifying properties and relatively unexplored potential. To assess the maximum water emulsification, oleic acid diethanolamide was synthesised by optimising the ratio of oleic acid to diethanolamine. Out of the prepared formulations, a clear emulsion was achieved at a 1:1 ratio of oleic acid to diethanolamine, demonstrating higher efficacy in water emulsification compared to other formulations. Characterization analyses, including FTIR and total acid number, were conducted for all surfactants. Formulations utilising the synthesised surfactant at varying concentrations, ranging from 1 to 10% were used to stabilise 5% water in the emulsions. The study demonstrated that clear emulsions showed extended stability beyond 45 days with formulations having surfactant concentrations ranging from 6 to 10%. The emulsions were further characterized for key fuel properties such as calorific value, viscosity and cloud point to meet the operational requirements of the fuel. The research aims to provide a sustainable, environment friendly and operationally efficient solution to the persistent problem of water precipitation in large diesel storage tanks, offering operational efficiency and environmental benefits to the fuel industry.