Black oil simulators that are commonly used in the industry are not formulated to handle the impact of capillary pressure on phase behavior, and they do not evaluate fluid properties at corresponding gas and oil phase pressure values. This may be a significant problem in simulation of nano-porous unconventional reservoirs where fluid phase equilibrium calculations are affected due to capillary forces in confinement. Studies have shown that the confinement manifests itself as suppression in bubble point pressure which extends the under-saturated portion of the formation volume factor curve for oil. The objective of this study is to evaluate the simulator behavior when the formulation of a black oil simulator is enhanced to include the capillary pressure impact on phase behavior. For the initialization step of the simulator, to achieve gravity-capillary equilibrium phase densities and suppression due to capillary pressure are calculated in an iterative manner while using fluid properties at the pressure of corresponding phase. For the flow simulation formulation, rather than a phase pressure, the (unconfined) bulk pressure was assigned as one of the solution variables to be solved in the discretized continuum equations. Individual phase pressures are derived from the bulk pressure using excess pressure and corresponding capillary pressure values. A correlation that represents the bubble point suppression as a function of solution gas oil ratio (Rs) and capillary pressure (Pc) was introduced into the simulator. Sensitivity tests were performed to show the impact of phase behavior change due to confinement on fluid flow and production from wells. Various simulation models were built to study the impact of single-, dual-, triple- and quintuple-porosity formulations on calculated oil and gas production profiles at different capillary pressure values. Results show that depending on the magnitude of the confinement and the formulation that is used, oil and gas production profiles of the simulation models are affected.