> Reduced demand for oil reduces the quantity of oil extracted
That is not true. Reduced price leads to higher demand. This is economics 101.
> The price drops and hardware to extract oil stops being produced
Oil extraction costs differ vastly amongst countries, and there is a lot of potential for increased productivity and efficencies when the margins become lower - price pressure is a driver for innovation. And countries like Saudi Arabia and Russia have a very high incentive to keep extracting oil and sell it, because their economy relies on it.
Because there, you might have learned that the basic economic principles you describe as "economics 101" are the equivalent of the "spherical cow in a frictionless vacuum"-type examples you get in introductory physics classes.
In the real world, demand is affected by all kinds of things, and sometimes, a product or service is just no longer desired by the population. Do you think that if you were selling buggy whips for $0.05 each, you'd be able to make a profit on them today? Of course not, because people don't need them. You'd barely sell any, and those purely as a novelty.
While there's still a lot of work to do to make it fully possible, and certain political groups are actively working against it, the world at large recognizes that getting off of fossil fuels is an important goal. Demand for oil is going to continue to drop—maybe not monotonically, but overall—regardless of what the price of oil does.
That is not true. Reduced price leads to higher demand. This is economics 101.
> The price drops and hardware to extract oil stops being produced
Oil extraction costs differ vastly amongst countries, and there is a lot of potential for increased productivity and efficencies when the margins become lower - price pressure is a driver for innovation. And countries like Saudi Arabia and Russia have a very high incentive to keep extracting oil and sell it, because their economy relies on it.