Fall on spilt oil in Libya? (7)
I believe the answer is:
tripoli
'in libya?' is the definition.
('Tripoli' is part of 'libya')
'fall on spilt oil' is the wordplay.
'fall' becomes 'trip' (as in tripping over).
'on' means one lot of letters goes inside another.
'spilt' is an anagram indicator.
'oil' is an anagram of 'oli'.
'trip' inserted within 'oli' is 'TRIPOLI'.
(Other definitions for tripoli that I've seen before include "North African city" , "Libyan port" , "Port city of Lebanon" , "where there's been regime change" , "Libyan city" .)