Oil, like coal and natural gas is a fossil fuel. It was formed millions of years ago and is found trapped in the rocks of the earth - under both land and sea. It is a finite resource and will, one day, be used up.
How was it formed?
The oil and gas we use today were formed millions of years ago when the remains of microscopic plants and animals (known as phytoplankton and zooplankton) settled on the sea bed and were buried deeper by sediments like clay and sand as the years passed by. The SEDIMENTARY LAYERS continued to accumulate, and the increased pressure and temperature turned the organic matter into compounds of hydrogen and carbon. These HYDROCARBONS resulted in oil and gas which, under pressure, seeped through the pore spaces and fractures in the rocks. The oil migrated upwards, and some will have reached the surface. But, where geological conditions were right, some will have been trapped underground - not as a "lake" but in the pores of the rock itself, known as a RESERVOIR.
A typical "trap" is an anticline, where rocks have been buckled into the fomr of a dmone. If the ANTICLINE has a cap of IMPERMEABLE rock (rock which the oil cannot pass through) it will remain in this "trap" until it is drilled for and brought to the surface. Gas may also be trapped in the same way in the same trap.
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