AbstractDisplaced faults crossing the reservoir could significantly increase the induced earthquake frequency in geo‐energy projects. Understanding and predicting the stress variation in such cases is essential to minimize the risk of induced seismicity. Here, we adopt the inclusion theory to develop an analytical solution for the stress response to pore pressure variations within the reservoir for both permeable and impermeable faults with offset ranging from zero to the reservoir thickness. By analyzing fault stability changes due to reservoir pressurization/depletion under different scenarios, we find that (1) the induced seismicity potential of impermeable faults is always larger than that of permeable faults under any initial and injection conditions—the maximum size of the fault undergoing failure is 3–5 times larger for impermeable than for permeable faults; (2) stress concentration at the corners results in the occurrence of reversed slip in normal faults with a normal faulting stress regime; (3) while fault offset has no impact on the slip potential for impermeable faults, the slip potential increases with the offset for permeable faults, which indicates that non‐displaced permeable faults constitute a safer choice for site selection; (4) an impermeable fault would rupture at a lower deviatoric stress, and at a smaller pressure buildup than a permeable one; and (5) the induced seismicity potential is overestimated and the injectivity underestimated if the stress arching (i.e., the poromechanical coupling) is neglected. This analytical solution is a useful tool for site selection and for supporting decision making during the lifetime of geo‐energy projects.