PSA Peugeot Citroen says it has suspended shipments of parts to Iranian partner, IKCO, until at least July as the simmering row surrounding the relationship continues to bubble.

The French automaker has been forced to temporarily stop supplying vital components to Iran Khodro as tighter European Union and US sanctions start to bite, with both parties estimating the halt to be costing around US$10m per month.

"We have withheld shipments to Iran until July," a PSA spokeswoman told just-auto from Paris. "It is for financing reasons because of the sanctions.

"I guess in May or June it will be reviewed. Most factories are closed in France in August, so if you start again it will be in September."

Peugeot supplies parts to IKCO for the 206 and 405 models and previously told just-auto it's total value of business with its Iranian partners to be 1.5% of its EUR79bn turnover.

Despite the draconian sanctions, IKCO is striking a defiant tone and insists it will be able to cope with the shortfall.

"The Iranian auto industry has a history of 50 years," an IKCO spokesman told just-auto from Tehran.

"We are confident we can replace parts on the 206 and 405 to the same quality. The precedent of producing parts in Iran with technology is very old."

The temporary rupture of Peugeot shipments is part of a wider picture of international sanctions being applied against Iran in a bid to dissuade it from what many view as the country's attempt to develop nuclear weapons.

The Iranians say pressure has also been applied by new PSA partner General Motors concerning its business with Iran - a suggestion the Americans vigorously reject.

Further influence has come from the US in the form of lobby group, United Against Nuclear Iran, which is urging Western automakers to halt business dealings with Tehran.

However, there may be a glimmer of hope as new talks between the EU and Iran are slated for next month in Baghdad.

"It depends on the nuclear negotiations which will be carried out next month in Baghdad and one week before in Vienna with the IAEA [International Atomic Energy Agency] ," said the IKCO spokesman.

"Maybe the atmosphere will be changed after these negotiations."