The conventional wisdom in financial circles -- more of a hope--is that world oil prices will stabilize around the OPEC-set price of $29 a barrel, and maybe even go up a bit if economic growth in the industrial world picks up.

Not likely, says a man who has been right all along on oil. Well before Wall Street and the CIA caught on, Prof. Eliyahu Kanovsky, of Queens College and Bar-Ilan University, an American economist who resides in Israel, predicted the oil glut, and the break in OPEC power and prices.

Those who scoffed at Kanovsky because they presumed he had an Israeli bias made a costly mistake. His factually dispassionate assessments on the oil outlook put the forecasts of highly paid and highly visible oil consultants in New York to shame.

Now, in an interview here, Kanovsky predicts that as a consequence of the little-understood but devastating Iran-Iraq war, the oil glut is going to be extended and deepened--and that can only mean a further sharp drop in oil prices. Kanovsky anticipates "an erosion" of 2 to 3 percent a year in real prices.

What's more, Kanovsky reports that American diplomats and other experts have failed to grasp the extent of the current economic crisis in Egypt, so severe that any Egyptian government must be prepared for social upheavals.

And ironically, they also do not understand that the real reason Jordan's King Hussein is unwilling to join negotiations over the West Bank is the unique and unheralded economic success in Jordan, which has enjoyed a real growth rate of 8 to 10 percent annually over the last decade.

"Hussein would be crazy to rock the boat," Kanovsky says simply.

"American policy in the Middle East has been based over the last number of years on an assumption, initiated by (Henry) Kissinger, that there were three friendly countries of importance-- namely, Iran, Saudi Arabia and Egypt. Well, of course, Iran has fallen by the wayside," Kanovsky says. "But my analysis suggests that the other two are on their way."

The American fixation on the "special" U.S.-Saudi relationship, he points out, assumed "that the need for their oil would increase and that their financial assets would increase." But with the glut-induced crack in oil prices, the Saudis no longer are piling up money reserves.

In fact, Saudi Arabia will have a $20 billion balance-of-payments deficit this year, shrinking its reserve assets from $140 billion to $120 billion. This cushion will go down more, he says, as the Saudis, fearful of Iran, are forced to shovel out additional billions of dollars to the Iraqis.

Egypt is in worse shape. Despite lavish American economic and military aid, Egypt faces desperate problems, exacerbated by the drop in oil prices. Egypt's relatively small volume of oil exports (in relation to the OPEC world) was bringing the Mubarak government about $3 billion in revenue, or more than four times the total export sales of everything else, including cotton. And at the peak of the OPEC boom, Egypt was earning $3 billion annually from the wages of 1.5 million Egyptian nationals who worked in the oil fields of other exporting countries.

Come now to the Iran-Iraq war. The world glut developed even though Iran's 6-million-barrels-a-day potential and Iraq's 3.5 million daily output for the most part couldn't be marketed while the two countries were shooting at each other.

Initially, the decline in Iranian production didn't cost Khomeini much in revenue, because prices skyrocketed. But when the effects of war devastation, along with huge casualties, began to cripple the Iranian economy, Khomeini once again stepped up oil production.

Now, after three years of decline, Kanovsky reports, Iran's oil production is back up from a low point of 1.5 million barrels a day to close to 3 million. But the Iraqis, whose main pipeline to Mediterranean ports has been blocked by Syria, are left with only one outlet, a pipeline through Turkey with a capacity of merely 650,000 barrels a day.

Thus, as the war continues, Iran has successfully begun to boost its oil production and exports, while Iraq is unable to do so--and is dependent on the Saudis and Kuwaitis to keep up a flow of financial aid, estimated at $45 billion so far.

"This means that sooner or later they (Saudi Arabia and Kuwait) are going to have to raise their (own oil) production. When and if the war ends, Iraq is going to unleash its (oil production) potential. And its potential is huge--second only to that of Saudi Arabia in the Middle East. . . .

"What this suggests is that the oil glut is going to be made lengthier and possibly steeper than it would otherwise be," Kanovsky concludes.

American officials, whose plans for the Middle East have so often misfired, might be helped in their policy-making if they take the trouble to analyze the available economic facts.