U.S. Ambassador John C. West said today that "the most difficult question" he was called on to answer during his 3 1/2-year tenure here was why the United States refused to deal directly with the Palestine Liberation Organization.

In an interview during which he all but explicitly called on the United States to recognize the PLO, West said, "The point I . . . feel very strongly about is that our failure to even want to talk or listen to the PLO or to engage in any dialogue is very difficult to explain or justify to Saudi Arabia and other Arabs."

The former governor of South Carolina also disclosed that, on the day the United States agreed to send four early warning radar planes here at the outset of the Iranian-Iraqi war, Saudi Arabia assured him it would in turn step up its oil production to "the absolute maximum" to make sure there were no shortages on the American market.

West, 58, said he plans to retire, but would await President Reagan's formal acceptance of his proferred resignation before making more explicit his controversial views about the Palestinian issue.

His statements on the PLO, as well as strong support he voiced during the interview for former president Carter's 1978 decision to sell the Saudis a squadron of F15 aircraft, seem certain to increase the controversy around West's performance as ambassador to the United States' most important and oldest Arab ally.

At the same time, they could earn him considerable credit in the Arab world, and particularly here, before he returns to his law practice in South Carolina.

West said allegations raised in early 1978 about the improper use of his influence as ambassador to help certain American firms here had been fully investigated by the State Department inspector general and "proven to be completely false."

On the PLO, West said, "Today, there is no doubt in the Arab world that the PLO has got to be involved in any ultimate negotiations or discussions of the Palestinian problem. Until we recognize that, then, frankly, in my judgment there is a stalemate."

West said that after his resignation is formally accepted he would make a more "positive statement." But, he added, "I have a little reluctance to come out four square against what is an announced policy of the government. Unitl I resign I think I have a duty not to undercut the announced policy."

The ambassador, nonetheless, indicated what he had in mind by suggesting that the U.S. government could first engage in a "dialogue" with the PLO before including it in formal negotiations in order to determine what it would be willing to do about recognizing Israel's right to exist in return for American recognition.

"Frankly, they are waiting for the new administration to take some steps to solve the two basic issues of Middle East peace," he said. "If the Reagan administration doesn't do that, then for a variety of reasons, some of which the Saudis themselves cannot control, the relationship is going to deteriorate and it could deteriorate very quickly and very badly."

West said the Carter administration's decision to send four early-warning aircraft here to help protect the Saudis from possible Iranian attack shortly after the Iranian-Iraqi war began was one of the most important decisions it took and was directly responsible for the Saudi decision to increase its production to its current level of more than 10 million barrels daily.

West urged Reagan to act quickly on a Saudi request for additional F15 equipment to show he intends to take an "evenhanded view."