We present experimental findings and matching modeling concerning the effect of water droplets on the theology of a high viscosity alkyd resin. In the flow regime where significant droplet deformation occurs, the shear viscosity of the fluid containing highly extended filaments was found to be lower than that of the alkyd resin on its own. A theoretical mechanism for this high shear rate viscosity reduction is proposed, and reasonable agreement is established with experimental observation. At intermediate shear rates a crossover between viscosity enhancement and viscosity reduction correlates with a capillary number close to 1. At low shear rates classic viscosity enhancement was observed.