Little oil can be produced from fractured oil-wet reservoirs by water flooding. Introduction of surfactant into the brine phase can improve the oil production by lowering the oil-water interfacial tension (IFT) and by altering the wettability of the matrix block to water-wet. A 3-D numerical simulator is developed to model this process. The capillary pressure, relative permeability and residual saturations of both phases are considered as functions of IFT and wettability, which are correlated to the surfactant and salt concentrations based on the data obtained from laboratory experiments. The mass balance equations are solved with a fully implicit scheme. Numerical simulation matches the experimental data obtained for alkaline surfactant imbibition. Simulation results indicate that both capillarity and gravity help to improve oil production: in the early stage of the production, capillarity is found to be the major driving force, and in the later stage, gravity dominates the production. Surfactant diffusion into the matrix block leads to IFT and wettability alterations which in turn lead to oil mobilization. Oil recovery by the time surfactant completely diffuses into the matrix block is found to be about 30% of the total recovery. As matrix block height increases, or surfactant alters wettability to a lesser degree, or permeability decreases, oil production rate decreases.