The cutting oil are a recent invention and are very effective as they do not dissolve in water but instead use water as an agent to form an emulsion over the metal surface. This helps prevent all chances of rust accumulation on the metal surface. Although they are called water soluble cutting oil, these cutting oil do not really dissolve in water completely. Instead they act with water to prevent rusting and corrosion.
Hard water reacts with soap and produces scum. It also reacts with cutting fluid to break down the emulsion. Therefore it is recommended to use soft water before the preparation of the emulsion. When mixed with hard water, cutting oils tend to form precipitates on machine parts and filter. The presence of hard water makes cutting oils more prone to rusting, bacterial growth and loss due to evaporation thereby increasing the maintenance cost.