Putin met with Iranian First Vice President Parviz Davoodi on the sidelines of a meeting in Kazakhstan between the heads of government of SCO member states, comprising Russia, China, and four Central Asian countries.
"Our relations are developing in a diversified manner in many directions," Putin said.
He noted the countries' strong political ties, growing trade, which has reached $3.5 billion, and the large number of "perspective projects in bilateral as well as multilateral formats".
On Iran's observer role in the SCO, Putin said: "we have welcomed Iran's participation in this international organization from the outset."
The SCO, widely seen as a counterweight to NATO's influence in Eurasia, comprises Russia, China, Kazakhstan, Tajikistan, Kyrgyzstan, and Uzbekistan. The group primarily addresses security issues, but has recently moved to embrace economic and energy projects.
Iran and Pakistan, who have held observer status in the SCO since 2005, previously announced their desire to become permanent members of the organization, but their request was not considered at a SCO foreign ministers meeting in Tajikistan on July 25.
Russia and China have been cautious over admitting Iran, embroiled in a long-running dispute with the West and Israel over its nuclear program and alleged support for radical groups in Lebanon and other countries.
Both China and Russia have major commercial interests in Iran. China wants Iranian oil and gas, and to sell weapons and other goods to the country, while Moscow hopes to sell more weapons and nuclear energy technology to Tehran.
The Kremlin also needs Iran's endorsement for a multinational arrangement to exploit the Caspian Sea's energy resources.
The other observers in the group are India and Mongolia.
