Abstract: Underground water-sealed rock caverns serve as a primary method for petroleum storage, where grouting is essential to ensure water-sealing performance. This study investigates how the permeability coefficient and thickness of the seepage-proof grouting ring influence containment efficiency. Based on a Chinese underground oil storage project, a two-dimensional oil-gas two-phase flow model was developed using finite element simulation. Results demonstrate that the grouting ring effectively controls both hydrocarbon diffusion and water inflow. Hydrocarbon diffusion increases with permeability and decreases with ring thickness, expanding over time following a power function. Water inflow reduces significantly after grouting, distributes as crown > sidewall > invert, and decreases further with greater ring thickness. The optimal parameters are identified as a permeability coefficient of 8.64×10⁻⁵ m/d and a thickness of 14 m, achieving both effective sealing and economic benefits. These findings provide practical guidance for designing similar water-sealed storage facilities.