Alternative fuels are being explored to mitigate the effects of petroleumbased fuels. Pyrolysis oil from waste tires is a promising alternative fuel; however, it contains very high concentrations of benzothiophene (BT) which are beyond the allowable sulfur limits of Taiwan and the Philippines. Mixing-assisted oxidative desulfurization (MAOD) is a method that removes sulfur from fuel oils by utilizing high-shear mixing and oxidants. In this paper, the oxidation of BT in a model fuel was studied to determine optimal process conditions. Crude Fe(VI) prepared from sludge was used as the oxidant. Using the Box−Behnken design under response surface methodology, the significance of the following independent variables was studied: mixing speed (4400− 10 800 rpm), phase transfer agent (PTA) amount (100 to 300 mg), Fe(VI) concentration (400−6000 ppm), and mixing temperature (40 to 60 °C). The results from a comprehensive statistical analysis showed the increase of sulfur conversion with high levels of Fe(VI) concentrations and PTA amounts together with low levels of agitation speeds and temperatures. The BT to BT sulfone conversions from experimental runs ranged from 17% to 64%. The optimum sulfur conversion of 88% for the BT model fuel was reached at the maximum levels of Fe(VI) concentration and mixing speed, along with the minimum levels of PTA concentration and temperature. The optimal MAOD variables were applied to a high-sulfur pyrolysis oil sample, which resulted in a sulfur reduction of 55%. The produced fuel oil meets the sulfur requirements of Taiwan and the Philippines for industrial heating oils. Therefore, the findings of the study support the effectiveness of sludge-derived Fe(VI) in the MAOD of BT in the model fuel and pyrolysis oil under mild process conditions.