Abstarct: The existing hydrocarbons in reservoirs are pumped out at the early stages due to the high confining pressure. In the procedure of extraction, the reservoirs’ pressure drops resulting in low hydrocarbon recovery. Several enhanced oil recovery (EOR) techniques such as hydraulic fracturing have been developed to help with this issue. Considering the importance of feasibility study for hydraulic fracturing and determination of its orientation and far-field stress, this study was carried out and the results were interpreted. Despite the common use of hydraulic fracturing in oil and gas production, there are still important and ambiguous aspects remaining which requires more investigation to increase the efficiency of hydraulic fracturing procedure. Propagation of hydraulic fractures in fractured reservoirs and interaction of these fractures with existing natural fractures in the reservoir are the main topics in this thesis. Displacement discontinuity and fictitious stress methods along with linear elastic fracture mechanics concepts for propagation modeling and interaction criteria are used for numerical modeling of propagation of hydraulic fractures in a fractured reservoir and their interaction with natural fractures. Using two numerical fictitious stress method (well-known for its accuracy in stress field) and displacement discontinuity method (well-known for displacement field and discontinuity modeling) has increased the accuracy of the modellings. After coupling these two methods and introducing the algorithm for interaction modeling the numerical codes are verified against several analytical solution and a series of experimental results. The effect of geometrical parameters (such as initial orientation of hydraulic fractures and natural fractures, length of hydraulic and natural fractures, and spacing between natural and hydraulic fractures) on propagation mechanism is numerically studied. Results showed that when in the analyzed geometry, hydraulic and natural fractures are closer, the propagation path is affected by natural fractures and once the distance decreases, the stress intensity factor of the propagating fracture (against expectations) decreases! If the hydraulic fracture get too much close to the natural fracture, the propagation may even arrest. The effect of many parameters on crack opening displacement which is a determining parameter in production rate was also investigated. Almost 1500 models were analyzed and studied. Then a multi-variation regression model was performed which resulted in a relation (with high coefficient of determination) to predict COD baxsed on any arbitrary setup of geomechanical and crack half lengths. The effect of propagation length and well radius on COD was also investigated which all showed an almost linear relation with high coefficient of determination. The interaction of hydraulic and natural fractures was also studied. Results showed that once a propagating hydraulic fracture passes through a natural fracture, its energy decreases and the chance of passing the subsequent natural fractures decreases substantially. Numerous modellings in various setups revealed required conditions for arrest, cross, or propagation of natural fracture after an interaction with a hydraulic fracture.