I'd say excessively basic solution might be causing a Cannizzaro reaction that is resulting in benzyl alcohol also being present in your distillate
but that is also more dense than water. How thick was your oil layer? I've had thin layers of dense liquid sit atop water probably mostly through
surface tension.
Also, only 10mM NaOH is required for pH of 12. I feel like that would be rapidly consumed by side-reactions but if it works, it works.
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