The oil came from small microorganisms that fell out of carbon cycle by getting themselves in places where they could not rot or get burned. The same story is behind coal, except it is not possible to generate any more coal deposits naturally.

The reason we have coal is some hundreds of millions of years ago there were huge plants that would topple but there was nothing on Eearth yet that could completely digest plant matter. So the biomass would basically stay where it fell and new plants would grow on top of dead ones. This explains the shape of coal deposits.

Some time later I think fungi evolved that could digest cellulose and any plant afterwards would rot rather than get burried. This explains why ALL coal deposits in existence are older than something like 600M years.