By ESPNSTAR.com staff
Kelantan headed into the clash with their Iraqi opponents four goals down on aggregate after suffering a crushing 5-1 defeat in last week's first leg.
Eight minutes before the break, any hope of a stunning comeback was extinguished as Arbil took the lead on the night through Sula Matovu.
Despite their best efforts, the Red Warriors were unable to make any progress in their bid to find a second-half consolation goal until injury-time, when Mohamad Ghaddar, who had come on for the ineffective Afiq Azmi, netted from the spot.
Arema were also eliminated from the competition after a 2-0 loss at Al Ettifaq saw them bow out 4-0 on aggregate.
Following a goalless first half, Ahmad Mubarak fired the hosts ahead in the 54th minute, before Saudi striker Yousef Al Salem wrapped things up with a second 13 minutes later.
In Tuesday's final clash, Al Kuwait recorded an impressive 3-0 win at Al Wehdat to book their place in the last four, following last week's 0-0 draw in Kuwait.
Issam Jemaa opened the scoring at the King Abdullah Stadium when he found the back of the net in the 20th minute, before fellow Tunisia international Chadi Hammami doubled the visitors' lead on the hour mark.
11 minutes later, Brazilian striker Rogerio added a third to cap off an excellent night in the office for the Brigadiers, keeping alive their hopes of repeating their 2009 triumph in the competition.
The final quarter-final clash will be decided on Wednesday when Thai Premier League outfit Chonburi visit Syrian side Al Shorta, with the latter leading 2-1 on aggregate.
Tuesday's AFC Cup Quarter-final 2nd Leg Results
Kelantan 1-1 Arbil (2-6 on agg.)
Al Wehdat 0-3 Al Kuwait (0-3 on agg.)
Al Ettifaq 2-0 Arema (4-0 on agg.)
Wednesday's AFC Cup Quarter-final 2nd Leg Fixtures
Al Shorta vs Chonburi (2-1 on agg.)