Tehran has "no reason" to suspend its enrichment of uranium to 20 percent -- one of the key demands of world powers engaging Iran in talks -- the head of its Atomic Energy Organisation said.

"We have no reason to cede on 20 percent, because we produce only as much of the 20 percent fuel as we need. No more, no less," Fereydoon Abbasi Davani was quoted as saying late Saturday by the ISNA and Mehr news agencies.

The issue of Iran's enrichment of uranium to 20 percent, and its stockpile of that uranium, were at the centre of talks on Wednesday and Thursday in Baghdad between Iran and six world powers (Britain, China, France, Russia and the United States plus Germany).

Those talks neared collapse when the powers, known as the P5+1, demanded Iran give up that activity and its stockpile in exchange for some inducements such as aircraft parts for its dilapidated commercial fleet and technical assistance in nuclear energy.

Iran, which is suffering under Western sanctions, said the inducements were far too little and countered with a demand that the P5+1 declare that it has a right to enrich uranium.

With that impasse, which Abbasi Davani termed "predictable," the talks teetered on failure and were saved only by last-minute wrangling that agreed to give negotiations another shot in Moscow on June 18-19.

Abbasi Davani was quoted as saying that Iran had now joined the small group of countries "that can produce fuel for others."

He added: "It is better that others engage us about providing (them) with fuel, not that they (the West) demand we shut down our fuel production."

According to the latest report by the International Atomic Energy Agency, Tehran has produced 145.6 kilogrammes of 20-percent enriched uranium, of which nearly a third has been converted into fuel for its research reactor.

Iran has also produced more than six tonnes of uranium enriched to 3.5 percent, part of which was processed further to make the 20-percent stock.

Uranium enriched to 90 percent or above is used for military ends, to make nuclear warheads. Twenty-percent uranium is considered just a few steps short of that level.

The IAEA has voiced suspicions that Iran might be working towards nuclear weapons research. It says its inspectors have not been given sufficient access to verify or invalidate that suspicion, although it expressed optimism that an agreement should be signed soon with Tehran permitting that.

Iran, for its part, insists its nuclear programme is exclusively peaceful. It has railed against Western sanctions hitting its vital oil and financial sectors that aim to force it to curb its activities as unfair and illegal, although it claims they are ineffective.

Those sanctions are set to tighten further on July 1, when an EU embargo on Iranian oil comes fully into effect. By then, US sanctions targeting Iran's central bank will also be fully implemented.

A diplomat on the P5+1 negotiating side told AFP that the Iranians were already obviously hurting under the Western sanctions, "but are too proud to say anything explicit."

The diplomat added that Iran's threat to walk away from the talks in Baghdad appeared to have been an attempt to "panic concessions out of us" but it did not work, and the P5+1 closed ranks.

With the talks moving to Moscow next month, the diplomat said, the onus would be on Russia -- which has supported Iran within the P5+1 -- to move them forward.

"The Russians will feel the need to deliver something positive and will have to sit on Iran," the diplomat said.