Volumetric mass transfer coefficient (kLa) is an important parameter in bioreactors handling viscous fermentations such as xanthan gum production, as it affects the reactor performance and productivity. Published literatures showed that adding an organic phase such as hydrocarbons or vegetable oil could increase the kLa. The present study opted for palm oil as the organic phase as it is plentiful in Malaysia. Experiments were carried out to study the effect of viscosity, gas holdup, and kLa on the xanthan solution with different palm oil fractions by varying the agitation rate and aeration rate in a 5 L bench-top bioreactor fitted with twin Rushton turbines. Results showed that 10% (v/v) of palm oil raised the kLa of xanthan solution by 1.5 to 3 folds with the highest kLa value of 84.44 h−1. It was also found that palm oil increased the gas holdup and viscosity of the xanthan solution. The kLa values obtained as a function of power input, superficial gas velocity, and palm oil fraction were validated by two different empirical equations. Similarly, the gas holdup obtained as a function of power input and superficial gas velocity was validated by another empirical equation. All correlations were found to fit well with higher determination coefficients.