The two nations have been at loggerheads since Saudi Arabia -- and a number of sympathetic nations -- shuttered its Tehran embassy
, following the execution of a Shiite cleric in Saudi Arabia and subsequent protests in the Iranian capital.
The diplomatic freeze curbs travel between the two nations, with no dispensation for athletes.
The Asian Football Confederation's (AFC) Competitions Committee decided in January that neutral venues would be used if relations between the two countries had failed to normalize by March 15. It had previously decided to schedule group stage matches between clubs from the two until later in the tournament in order to evaluate the political and security situations in both countries.
Six matches affected
There are three group stage matchups, held over two legs in late April and again in early May, that are affected by the ruling. In Group A, Foolad Mobarakeh Sepahan of Iran is due to meet Saudi Arabia's Al Ittihad -- three times winner of the competition. Group B's Al Nassr from Saudi will meet Iranian team Zobahan, currently equal on points at the top of the group, and Group C leader Tractorsazi Tabriz will meet second-placed Saudi team Al Hilal.
The statement from the AFC does not address what will happen should teams progress to the knockout stages and find themselves paired.
In a letter to the two countries' football associations, the AFC said:
"It is most unfortunate for the AFC to learn that at the time of writing, the Saudi Arabian government has yet to lift the travel restrictions on their nationals, which prohibit travel to (the Islamic Republic of) Iran. This travel ban offers no special dispensation for football teams.
"Furthermore, there has been no significant development in the relationship between the two countries concerned, which was considered the main factor according to the AFC Competitions Committee decision dated January 25, 2016."
The AFC has given the Football Federation Islamic Republic of Iran and the Saudi Arabian Football Federation (SAFF) until March 25 to file proposals for neutral venues.
Three Iranian teams have won the Confederation's centerpiece tournament -- Taj, Esteghlal and Pas Tehran -- and Saudi Arabia's champions Al Ittihad's three wins sit alongside Al Hilal's two crowns.