A method for reducing mercaptan concentration in a crude oil is disclosed. The method comprises contacting the crude with a treating solution comprising a hypochlorite solution, whereby the mercaptan sulfur is oxidized and converted to at least one sulfur oxoacid or salt thereof, yielding a treated crude oil having less than 50 ppm mercaptan sulfur and residual organic chloride. The treated crude oil containing residual organic chloride is brought in contact with a caustic solution at a molar ratio of caustic to chloride of 0.1:1 to 50:1, generating an upgraded crude oil with less than 10 ppm organic chloride. In one embodiment, the spent treating solution is recycled to form a regenerated hypochlorite stream for use in the treatment solution.