Oil originally found in desiccated fish (4)
I believe the answer is:
dory
'fish' is the definition.
(dory is a kind of fish)
'oil originally found in desiccated' is the wordplay.
'originally' says to take the initial letters.
'found in' means one lot of letters goes inside another.
'desiccated' becomes 'dry' ('dry' can be similar in meaning to 'desiccated').
The initial letter of 'oil' is 'o'.
'o' put into 'dry' is 'DORY'.
(Other definitions for dory that I've seen before include "Sea-wolf" , "Golden-yellow fish" , "Marine fish; rowing boat" , "Fish of mackerel family" , "Fish and flat-bottomed boat" .)