In the presence of an emulsifying agent, a mixture of oil and water becomes a colloidal dispersion.
Colloidal dispersion otherwise colloid is a system, in which discrete particles, droplets or bubbles of a dispersed phase (in this case oil), whose size at least in one dimension is in the range from 1 to 1000 nm are distributed in the other, usually continuous phase - dispersion medium (in this case water) differing from the dispersed phase in composition or state of aggregation.