Excessive water production increases lifting costs and shortens well life, yet existing control methods remain inadequate-chemical treatments are short-lived, mechanical systems costly, and cyclic operations disruptive. To overcome these issues, this study presents a Downhole Fluid Segregation workflow that exploits gravity-driven phase separation in the wellbore to selectively produce oil while retaining excess water in the reservoir. Calculations showed single oil blobs rose through a water column within 1-16h, with transit time decreasing as droplet size increased. Analytical scaling indicated that stabilization time increases sharply with reservoir thickness but decreases with vertical permeability. For instance, for a 13-m-thick reservoir with a vertical permeability of 400 mD, full rebalancing required 193 days. Reservoir simulations of a 15-month shut-in increased oil saturation in upper intervals from ~0.2-0.4 up to ~0.6. Restarting production at moderate rates provided the best balance between oil recovery and water control, while high rates caused early water breakthrough. Field pilots in Western Kazakhstan confirmed feasibility: watercut fell to <1% even in a well producing 8,500cP oil, while medium-viscosity wells showed increased oil output and watercut decline from 95-98% to <1%. Limitations include fractures, low kv, and fluid-stability constraints. Future work targets full automation and multiwell pilot verification.