Turkey's sole oil refiner Tupras agreed the deal with Libya and has started negotiations with Saudi Arabia for a long-term contract, Energy Minister Taner Yildiz was quoted as saying by the Anatolia news agency.  The move comes after the United States said on Monday it would exempt seven emerging economies, including Turkey, from tough new sanctions after they cut oil supplies from Iran. US Secretary of State Hillary Clinton added India, Malaysia, South Africa, South Korea, Sri Lanka, Turkey and Taiwan to the list of those exempt from the sanctions.

Turkey has been importing a third of its oil from Iran. In late March, Tupras said it had cut its purchases from Iran by 20 percent as the West tightened sanctions on Tehran due to its disputed nuclear programme.

Iran insists its nuclear programme is meant for peaceful purposes but many Western nations fear it is trying to build a nuclear bomb.