Fault damage zones in highly porous reservoirs are dominated by deformation bands that generally have permeability-reducing properties. Due to an absence of sufficiently detailed measurements and the irregular distribution of deformation bands, a statistical approach is applied to study their influence on flow. A stochastic model of their distribution is constructed, and band density, distribution, orientation, and flow properties are chosen based on available field observations. The sensitivity of these different parameters on the upscaled flow is analyzed. The influence of a heterogeneous permeability distribution was also studied by assuming the presence of high permeability holes within bands. The fragmentation and position of these holes affect significantly the block-effective permeability. Results of local upscaling with a diagonal and full upscaled permeability tensor are compared, and qualitatively similar results for the flow characteristics are obtained. Further, the procedure of iterative local-global upscaling is applied to the problem