To provide an oil modified phenol resin excellent in flexibility, impact strength, and tracking resistance, and also in economy.

Production method of this phenol resin suitable for a molding material is, first, a drying oil such as tall oil and linseed oil, phenols, and, if desired, an arom. hydrocarbon resin are reacted in the presence of an acid catalyst, then 0.5-0.9 mol ratio of formaldehyde to a mol of phenols is added and reacted under an acidic condition, and solidified by dehydrating and concentrating under a reduced pressure. The acid catalyst used when tall oil, phenols, and, if desired, the arom. hydrocarbon resin are reacted is an arom. sulfonic acid. Further, the acid catalyst used when linseed oil, phenols, and, if desired, the arom. hydrocarbon resin are reacted is a perfluoroalkylsulfonic acid.