Oil supply on flow easily produces capital (7)
I believe the answer is:
tripoli
'capital' is the definition.
(capital of Libya)
'oil supply on flow easily' is the wordplay.
'supply' indicates an anagram (in a supple way).
'on' is an insertion indicator (as in clothing 'on' a person).
'flow easily' becomes 'trip' (I am not sure about this - if you are sure you should give a lot more credence to this answer).
'oil' with letters rearranged gives 'oli'.
'oli' enclosing 'trip' is 'TRIPOLI'.
'produces' is the link.
Can you help me to learn more?
(Other definitions for tripoli that I've seen before include "City in Libya - city in Lebanon" , "Place in Libya" , "Port city of Lebanon" , "where there's been regime change" , "Libyan city" .)