African city’s mistake over distribution of oil (7)
I believe the answer is:
tripoli
'african city's' is the definition.
(capital of Libya)
'mistake over distribution of oil' is the wordplay.
'mistake' becomes 'trip' (trip is a kind of mistake).
'over' means one lot of letters go next to another.
'distribution of' indicates anagramming the letters.
'oil' anagrammed gives 'oli'.
'trip'+'oli'='TRIPOLI'
(Other definitions for tripoli that I've seen before include "city on the Mediterranean" , "Capital of Libya" , "North African capital" , "Middle East port" , "North African port" .)