Saudi Crown Prince Fahd said in an interview published today that his country is "prepared" to raise its oil prices to end the five-month-old price split in the Organization of Petroleum Exporting Countries.

Oil industry sources said Fahd's statement - the first Saudi offer to raise prices - appeared to be a breakthrough and indicated OPEC could agree formally on a uniform 10 per cent price increase soon.

Just a week ago, the Middle East Economic Survey, an authoritative bulletin on oil affairs, reported OPEC had agreed to cancel a 5 per cent increase schedule for July.

Fahd, deputy prime minister of Saudi Arabia and the brother of King Khalid, is scheduled to arrive in Washington Tuesday for talks with President Carter on the Middle East and oil policy.

Fahd said the kingdom is also willing to help the United States build up strategic oil reserves - but only if the Carter administration "throws all its weight" into settling the Arab-Israeli conflict on Arab terms.

"We are prepared to raise the price of our oil gradually between now and the end of the year to reach the upper level," Fahd told the Beirut newspaper Al Anwar.

Saudi Arabia split from other OPEC members last December and raised its prices by only 5 per cent. Most of the others raised prices by 10 per cent.

Asked by Al Anwar if Saudi Arabia will help Carter's energy conservation program, Fahd said, "Yes we would, but we have demands in return for that. First and foremost, we want the United States to throw all its weight into the process of reaching a just settlement for the Middle East crisis, based on Israeli withdrawal from all Arab territories occupied in 1967 and to their homeland and a state of their the return of the Palestinians' rights own."

Menachem Begin, who is slated to become Israel's new prime minister, has flatly rejected both of those Arab demands.

Asked if Saudi Arabia would use its oil as a diplomatic weapon and threaten another oil boycott of the West in peace efforts stall, Fahd said, "We hope the United States will respond to our demands and work for a just peace without any pressure. As long as it needs our oil and we need its political influence and technical skills, I think we can cooperate."