World oil prices topped the $110 US a barrel level on Thursday for the first time since September 2008 as political and economic unrest spooked traders.

A barrel of West Texas crude for May delivery hit $110.30 on the New York Mercantile Exchange.

A European interest rate cut, continued political unrest in Libya and another earthquake in Japan sent crude futures up $1.47, or 1.4 per cent, during the session.

Thursday's close would represent the first time spot oil prices popped above the $110 level since Sept. 25, according to the U.S. Energy Information Agency.

Many causes

Oil's short-term gain was driven by a myriad of causes.

The European Central Bank raised interest rates Thursday by a quarter of a percentage point to 1.25 per cent in a move designed to stem growing inflationary pressures on that continent.

The rate shift also should boost the value of the euro and weaken the U.S. dollar, which likely will reinforce higher oil prices, experts warned.

As well, traders pointed to damage at a Libyan oil field as another reason for high oil prices, arguing that civil unrest in the country will crimp crude supplies.

Libyan unrest is helping to drive oil prices higherm, analysts say. Nasser Nasser/Associated Press

Finally, another earthquake in Japan added to general unrest in the oil market Thursday.

Longer term peaks

The last time oil prices inched above $110 a barrel marked the end of a prolonged period — between April and August 2008 — of higher crude valuations, according to Calgary-based AJM Petroleum Consultants.

And this time around, oil prices again might stay high for months, the company said.

"The thirst for energy in China, India, Korea, and ultimately Japan as it goes through the rebuilding process, will continue to provide a stimulus for the use of crude oil," the company said in its latest international price forecast in March

In fact, some oil forecasts now predict that oil prices will average more than $100 in 2011. By contrast, oil hit $147 a barrel back in mid-2008 but only averaged $99 over the entire year.