Oilfield water contains valuable geological information and plays an important role in petroliferous basins, being closely related to diagenesis, reservoir physical properties, and hydrocarbon preservation conditions. Here we present a case study of oilfield water in Permian formations in the western periphery of the Mahu Sag, Junggar Basin, China. The genesis of oilfield water and its application in oil exploration were investigated through the coupling of tectonic activity, paleoclimate, and water–rock interaction. Volcanic activity provided a rich source of ions, and a hot paleoclimate intensifies the evaporation and concentration of sedimentary water. Tectonic fractures offered channels for water exchange among formations. Water–rock reactions, marked by sodic feldspathization and calcium feldspar dissolution, had profound effects on the oilfield water type and reservoir properties. We established a link between oilfield water and favorable targets for oil exploration. In terms of vertical trends, the Jiamuhe and Upper and Lower Urho formations have strong sealing abilities for hydrocarbon preservation. In the horizontal dimension, areas with high total-dissolved-solid and CaCl2 concentrations, low rNa/rCl, rSO4 × 100/rCl, (rHCO3+CO3)/rCa, and rMg/rCa ratios are favorable for oil exploration.