Conventional in-situ conversion technologies including electrical heating or injection of hot fluid face development challenges. Low heat transfer efficiency and limited pore expansion restrict its wide applications. Maintaining uniform heat propagation in heterogeneous shale formations remains problematic. This study investigates the cracking behavior of low-maturity organic-rich shales under inert (N2) and oxidative (air) atmospheres, aiming to evaluate the effects of oxygen participation on reaction kinetics, pore structure evolution, and oil yield efficiency. Using integrated characterization techniques—including thermogravimetry (TG/DSC), X-ray diffraction (XRD), nitrogen adsorption–desorption, nuclear magnetic resonance (NMR), and scanning electron microscopy (SEM)—the authors demonstrate that oxidative pyrolysis significantly alters shale transformation pathways. Key findings reveal that oxygen shifts kerogen cracking to lower temperatures and enhances pore development through oxidative consumption of residual carbon, which promotes micropore expansion and connectivity, ultimately increasing total porosity by 18.9% at 600 °C. Oil yield experiments show peak production at 450 °C in air, attributed to accelerated organic matter conversion, while higher temperatures (>500 °C) trigger secondary cracking that reduces yields. These results highlight the potential of controlled oxidative pyrolysis for improving in-situ shale oil recovery efficiency while minimizing energy consumption.