Nanofluids or liquids with suspended nanoparticles are likely to be the future heat transfer media, as they exhibit higher thermal conductivity than those of liquids. It has been proposed that nanoparticles are apt to congregate and form clusters, and hence the interaction between nanoparticles becomes important. In this paper, by taking into account the interaction between nearest-neighbour inclusions, we adopt the multiple image method to investigate the effective thermal conductivity of nanofluids. Numerical results show that then the thermal conductivity ratio between the nanoparticles and fluids is large, and the two nanoparticles are close up and even touch, and the point-dipole theory such as Maxwell-Gaett theory becomes rough as many-body interactions are neglected. Our theoretical results on the effective thermal conductivity of CuO/water and Al2O3/water nanofluids are in good agreement with experimental data.