Geomechanical analysis is essential to assess the productivity forecast of cyclic steam simulation (CSS) operations in heavy oil reservoirs. The high-temperature and high-pressure fluid injection, as well as depletion in unconsolidated and poorly cemented porous media during CSS, may generate a relevant stress–strain response at levels that can lead to irreversible changes in reservoir permeability. Therefore, it is fundamental to consider permeability dependence on rock strain to properly analyze the impact of geomechanics, pressure, and temperature on reservoir performance. This paper implements a proposed directional strain-dependent permeability model to assess the productivity and compare it with a conventional volumetric permeability model through numerical simulation, considering the effects of wellbore creation on the stress–strain initial state. An explicit coupling between CMG-STARS and the geomechanics in-house simulator GSIM is carried out to perform the simulations using the proposed model. The results of oil production rates and permeability profiles show competitiveness between dilation and compaction periods that modify the structure of the porous media. There is a significant influence of stress state, strain, and injected energy on the permeability parameter. The approximations of this study might be used for feasibility assessment and optimization of CSS when integrating reservoir flow and geomechanical behavior analysis in productivity forecast. Highlights Permeability changes near the wellbore are amplified when the open-hole internal condition is implemented in reservoir simulation. A flow capacity and productivity loss due to depletion are expected when CSS is implemented on unconsolidated heavy oil reservoirs. The permeability loss on reservoirs subjected to CSS may be managed by selecting the adequate operating variables.