Source of oil, spot circled by Swedish Nightingale (7)
I believe the answer is:
linseed
'source of oil' is the definition.
(as in linseed oil)
'spot circled by swedish nightingale' is the wordplay.
'spot' becomes 'see' (both can mean to notice or observe).
'circled by' means one lot of letters goes inside another (I've seen this in other clues).
'swedish nightingale' becomes 'lind' (I've seen this in another clue).
'see' put within 'lind' is 'LINSEED'.
(Other definitions for linseed that I've seen before include "Flax product, a source of oil" , "Part of flax used as oil" , "Oil-producing plant" , "Enisled (anag.)" , "Flax plant product providing oil" .)