A computational fluid dynamics (CFD) model was developed to simulate the liquid flow field and surface deformation caused by an impinging shrouded supersonic jet on a liquid bath from the top as used in oxygen steelmaking. Two different computational domains were used to avoid the difficulties that arise from the simultaneous solution of compressible gas phase and incompressible liquid phase. The results were validated against the experimental data and the reasons for any deviation were described accordingly. The effect of shrouding gas flow rates on the axial jet velocity distribution, depth of penetration and velocity distribution of liquid phase were investigated. A high shrouding gas flow rate was found to increase the depth of penetration and liquid free surface velocity which in turn contributes in reducing the mixing time. The mechanism of droplets generation was investigated in detail. The CFD model successfully predicted the formation of surface waves inside the cavity and consequent liquid fingers from the edge of the cavity which were experimentally observed by the previous researchers.^1,2) It was shown that the Blowing number theory (N_B) fails to predict the droplet generation rate if the cavity operates in the deep penetrating mode. The possible reasons behind this limitation have been discussed using the Blowing number equation and CFD results. Finally, the cavity surface area was found to be the most influencing factor in the generation of droplets.