After eight years of litigation, the staff of the Federal Trade Commission yesterday recommended ending the agency's highly publicized antitrust suit aimed at breaking up the nation's eight largest oil companies.

The recommendation was disclosed in an agreement with the eight oil companies in which the FTC staff agreed to propose ending the case in exchange for being allowed to retain access to the millions of pages of documents obtained from the industry during the course of the suit.

In making its recommendation, the staff of the FTC's Bureau of Competition said it is likely the case "could continue without a final judgment on the merits or implementation of remedial provisions until 15 to 20 years after the filing of the complaint" or sometime between 1988 and 1993.

Further, the staff said the case had been hampered by "massive" discovery requests by the oil companies, most significantly, requests for documents from other government agencies throughout the federal government.

Although the commission could reject the staff's proposal, the case now appears to have little political support. The commission, feeling the strains of congressional and Reagan administration efforts to roll back its powers is believed unlikely to overrule the recommendation.

While the commission staff was recommending shutting down the so-called "Exxon" case, a House appropriations subcommittee was considering limiting funding for the FTC's other major antitrust matter, the case against the cereal industry.

The subcommittee on state, justice, commerce and judiciary, meeting in closed session, tentively approved such a funding cutoff, although the panel did not complete work on the entire package of appropriations matters. The subcommittee's markup will continue today.

The "exxon" case was brought in 1973 at a time when it was politically popular to criticize big oil and call for the breakup of the alleged oil company monopoly, and the filing of this suit represented the FTC's effort to, in part, respond to that concern.

The targets of the suit are Exxon Corp., Texaco Inc. Gulf Oil Corp., Mobil Oil Corp., Standard Oil Co. of California, Standard Oil Co. (Indiana), Shell Oil Co., and Atlantic Richfield Co. Each of the companies aggressively has fought the commission's efforts to obtain internal documents and has denied the monopolistic charges that are the case's foundation. Legal and related fees have cost the companies at least $100 million, oil executives say.

Gulf, echoing the ongoing concerns of all eight oil companies, said that it "believes now, as it has since the proceedings began in 1973, that the charges are unfounded and unjust. Gulf has not violated the Federal Trade Commission Act and has been a strong competitor in searching for, producing, transporting, selling, and refining crude oil."

In its first statement of the issues in the case, filed Oct. 31, 1980, the FTC charged the eight companies with joint and individual acts designed to "maintain and reinforce the noncompetitive market structure at every level of the petroleum industry."

The staff also said the oil companies had established "artificially high price levels for both domestic and foreign crude oil," and the "foreclosure and suppression" of competition in refining and marketing of petroleum products. Those actions, the staff said, led to "the payment of substantially higher prices" for refined oil products by American consumers.

But in its filing yesterday, the FTC staff said the decision to recommend the closing of the case "is not in conflict" with their "belief that the anti-competitive practices" described in the October document "should be addressed in a timely and focused fashion."

The recommendation instead suggested that resolution of the issues raised in the case could be better handled "in a more focused manner, and on a more contemporary basis." In addition, the commission staff was apparently hampered by their inability to bring particular matters before the commission relating to oil industry practices, since the commission could not consider related matters with the larger case pending.

Also implicit in the staff's legal brief is the suggestion that the industry, increasingly free from federal price controls, is a much different one than the petroleum business of 1973. The staff noted that the case "eight years after its inception is still in the midst of the pretrial discovery phase" and said "existing and potential problems abound to frustrate its timely litigation."

The staff recommendation was made as a result of an April 24 order by the commission delaying further action in the case until all parties provide a schedule for the case and discuss procedures for narrowing the suit or whether new factors should be considered by the commission in evaluating the status of the matter.