This paper presents a semianalytical steady-state productivity of oil/water two-phase flow in low-permeability reservoirs with both top and bottom boundaries closed which takes the permeability stress-sensitive and threshold pressure gradient into account. Using the similar approach as Joshi’s (1988), the three-dimensional (3D) horizontal well problem is divided into two two-dimensional problems (2D), and then the corresponding nonlinear steady seepage mathematical models in vertical and horizontal planes are established. Through the separation of variables method and equivalent flow resistance principle, the productivity equation of horizontal well is obtained. The liquid and oil productivity with different influential factors are plotted, and the related effects are also analyzed. This paper expanded the conventional productivity equations of single phase into multiphase flow which have both theoretical and practical significance in predicting production behaviors in such reservoirs.