The Iraqi parliament will finally meet on Monday with the main players under pressure not to cave in to sectarian politics.
The results of the May 12 parliamentary elections were only ratified two weeks ago after a partial recount to address allegations of fraud. Iraqi MPs now have to elect a parliament speaker, a president and a prime minister who can form a new government.
US Secretary of State Mike Pompeo phoned two Iraqi leaders on Saturday to voice support for efforts to form a "moderate, nationalist" government that would serve all Iraqis, his spokeswoman said.
Last week, Iraqi and Kurdish officials accused Iran of exerting pressure on MPs to promote Tehran’s interests.
No political bloc won an outright majority in the 329-seat parliament. Populist cleric Moqtada Al Sadr won the largest number of seats, 54, followed by an alliance of government-sanctioned militias, known as Hashed Al Shaabi, with 47.
However, tensions have been mounting after Hadi Al Amiri, leader of the militia coalition, and former prime minister Nouri Al Maliki – both favoured by Iran — joined forces to form an opposition to Mr Al Sadr's bloc.
With alliances still up in the air, there are concerns that MPs might try to thwart the election of a speaker on the first day.
"We might face a situation where members attend for the swearing part of the session to validate their membership of the new parliament but do not proceed to the election of the speaker which is the last item on the day's agenda and a key output and purpose for the session," said Lukman Faily, Iraq's ambassador to the US from 2013 to 2016.
Mr Pompeo’s call to caretaker Prime Minister Haider Al Abadi seemed to warn of the possibility of a toxic political environment as he "emphasised the importance of safeguarding Iraq's sovereignty during this critical time", State Department spokeswoman Heather Nauert said.
Mr Pompeo also spoke to Vice President Ayad Allawi, saying the US hoped the new Iraqi government "includes all communities and serves all of the Iraqi people".
"The US wants to see a new government which is far from any Iranian influence, while we see and hear the same from the Iranians on US involvement," said Mr Faily.
"Both the US and Iran expect us to have a love-hate relationship with them, while we don’t want and see the need for such a binary view of our bilateral relationships with our key partners."
Mr Pompeo also expressed his concern in a tweet about a conversion with Brett McGurk, the special US presidential envoy for the global coalition to defeat ISIS, who is in Baghdad.
"Doing a great job. Forming a strong Iraqi government on national basis is essential to the enduring defeat of #ISIS," Mr Pompeo wrote.
The formation of a new government comes amid growing unrest in southern cities over poor public services and corruption.
On Sunday, about 150 protesters gathered at the main entrance to Iraq's giant Nahr Bin Omar oilfield in Basra and threatened to break in if the government did not respond to their demands to improve basic services and address their complaints over Basra's drinking water, which residents say is undrinkable due to its high salinity.
"We will not allow the oilfield to operate unless we get clean water. No services, no jobs and now no clean water. We are fed up," said Hassan Ali, a protest organiser.
Officials at the oilfield, operated by state-run Basra Oil Company, said production was running normally. Nahr Bin Omar produces about 44,000 barrels per day.
Basra health officials said more than 17,000 people had been treated for illnesses caused by polluted drinking water in recent weeks. Others reported eye diseases from bathing in the water from the Shatt Al Arab river.
On Friday, hundreds of protesters stoned and tried to break into Basra's provincial government headquarters, demanding better public services and an end to pervasive corruption.
Other protesters gathered at a main road to the east of Basra leading to a border crossing with Iran, trying to prevent trucks from moving, customs and police officials said.
Oil exports from Basra account for more than 95 per cent of Iraq's state revenue and any disruptions to production could severely affect the ailing economy.