But wouldn’t farmed land increase if there is an abundance of oil? Needed for farming equipments.

Actually, most of the ground would have originally been broken using literal horsepower, which runs on hay rather than oil. Tractors didn't become the norm until after WWI (maybe not even until after WWII, I'm not an expert on agricultural history, but I do know that the reason you used to see wooden grain elevators every few kilometers along prairie railways was to accommodate farmers who were still hauling stuff in horse-drawn wagons). By the time the oil was being commercially exploited, most of the useful land was already under the plow.