A method, system and computer program product are disclosed for simulating fluid flow in a fractured subterranean reservoir. A reservoir model representative of a fractured subterranean reservoir is provided. The reservoir model includes porous matrix control volumes and a network of fractures, which define fracture control volumes, overlying the porous matrix control volumes. A system of equations based on scale separation is constructed for fluid flow in the porous matrix control volumes and the fracture control volumes. The system of equations can include fracture equations having a pressure vector for each network of fractures that is split into an average pressure value and remainder pressure value. The system of equations based on scale separation is sequentially solved, such as by using an iterative Multi-Scale Finite Volume (MSFV) method.