Merit fuel around London area, to a point (7)
I believe the answer is:
deserve
'merit' is the definition.
(I know that merit can be written as deserve)
'fuel around london area to a point' is the wordplay.
'fuel' becomes 'derv' (derv is a kind of fuel).
'around' is an insertion indicator.
'london area' becomes 'SE' (abbreviation for South East).
'to a point' becomes 'e' (compass point).
'derv' placed around 'se' is 'deserv'.
'deserv'+'e'='DESERVE'
(Other definitions for deserve that I've seen before include "Severed (anag)" , "Justify" , "rate" , "Warrant" , "Be worth" .)