Turkey says will continue to buy natural gas from Iran

The U.S. Senate resoundingly approved expanded sanctions on Iran on Friday, in its latest effort to ratchet up economic pressure over Tehran's nuclear programme. The move includes measures aimed at stopping Turkish-Iranian "gold for gas" trade.

"We have always told officials that the issue is of strategic importance to us and we couldn't comply with the sanctions," Erdogan told a joint news conference with Russian President Vladimir Putin in Istanbul.

"We are at the same point now. We told them we would carry out the necessary swap because it's a strategic product and we will continue in that direction in the future," he said.

Iran sells oil and gas to Turkey, with payments made to Iranian state institutions. U.S. and European banking sanctions ban payments in U.S. dollars or euros, so Iran is paid in Turkish lira - of limited value for buying goods on international markets, but ideal for buying gold in Turkey.

Turkey's Deputy Prime Minister Ali Babacan said last month that the lira Iran received from Turkey for its gas was being converted into gold because sanctions meant that it could not transfer the cash into Iran.

(Reporting by Evrim Ergin and Ece Toksabay; Writing by Nick Tattersall)