Oil production will change the stress field of reservoir and induce the strain of rocks. As a result，this will influence the fluid percolation. A math model of coupled fluid flow and geomechanics is set up. The following factors are considered in this model：constant temperature，two phases of oil and water，deformation of reservoir，changes of stress，porosity and permeability. There are seven variables in the governing equations to comprise the matrix of pore pressure，fluid saturation and displacement. The system of the nonlinear governing partial differential equations is discreted using the finite difference method. The finite difference equations are arranged as seven-point stencils. A fully implicit procedure is adopted for maximum numerical stability. Analyzed by an example，it is shown that the parameters of stress，strain，porosity and permeability change with time and space. This model can be used to solve many problems，such as simulating deformation of reservoir，calculating changes of stress and strain，analyzing changes of porosity and permeability in reservoir.