Originally Posted by cobra
Oil or water is just what they use to "quench" the steel after it has been heat treated. Oil gives it a good hardness and is less likely to crack the steel and has a more uniform hardness throughout the blade. Water is more likely to crack the blade and depending on thickness, the hardness will be less uniform throughout the metal. Water quenching will also cause the blade to be more brittle and susceptible to breaking, chipping, etc. because it lowers the temperature of the blade faster. It just depends on the application which is better. For knife blades oil would definitely be the better of the two.