Iraqi Prime Minister Mustafa al-Kadhemi met Iran's President Hassan Rouhani in Tehran on Tuesday during his first trip abroad since taking office.
Rouhani said in a joint news conference with Kadhemi that they had discussed expanding trade ties, fighting the novel coronavirus and efforts to ensure regional stability.
"The two governments' will is to expand bilateral trade ties to $20 billion," Rouhani said after an hour-long meeting with the Iraqi leader.
Iraq is one of Iran's main destinations for non-oil exports but trade has dipped as the COVID-19 pandemic forced temporary border closures.
Rouhani said Iran was ready to "stand with Iraq for the stability and security of Iraq and the region."
He hailed as "heroes" a top Iranian general and an Iraqi commander killed together in a US drone strike on Baghdad airport at the start of the year.
"I deem it necessary to honour the two heroes of the fight against terrorism, martyrs General Qasem Soleimani and Abu Mahdi al-Muhandis," he said.
He described them has having "worked for Iraq's security in previous years", a reference to Baghdad's fight against the Islamic State group.
The Iranian president also pledged to help Baghdad by "providing it with all sanitary and medical goods it can" for the fight against the coronavirus.
Iran has been struggling to contain the Middle East's worst coronavirus outbreak with over 14,600 deaths and more than 278,800 cases.
Neighbouring Iraq has reported close to 4,000 deaths and 97,000 cases of COVID infections on its territory.
- High-level delegation -
Iraq's delegation includes the ministers of foreign affairs, finance, health and planning, as well as Kadhemi's national security adviser, some of whom also met their Iranian counterparts.
Kadhemi is also expected to meet Iran's supreme leader Ayatollah Ali Khamenei later in the day, among other senior officials.
He had been scheduled to visit Iran's regional rival Saudi Arabia as his first trip abroad, then quickly follow it up with a trip to Tehran, in a carefully calibrated balancing act.
However the Saudi leg was postponed after King Salman was hospitalised on Monday.
Baghdad has often found itself caught in the tug-of-war between Riyadh, Tehran and Washington, which Kadhemi is also set to visit within the next few weeks.
Kadhemi rose to the premiership in May after serving as head of Iraq's National Intelligence Service for nearly four years.
He formed close ties to Tehran, Washington and Riyadh during that time, prompting speculation he could serve as a rare mediator among the capitals.
The prime minister's trip to Tehran comes after he received Iran's top diplomat Mohammad Javad Zarif in Baghdad on Sunday.
Relations between the two countries were not always close -- they fought a bloody war from 1980 to 1988.
Tehran's influence in Baghdad grew after the 2003 US-led invasion of Iraq toppled the government of Saddam Hussein.
Iran is now said to have significant leverage over many of Iraq's Shiite political groups.