The United States welcomed the apparent consensus among Iraq's political factions on forming a new government after weeks of political deadlock, Secretary of State Mike Pompeo said on Monday.
Washington hoped that the government will be able to confront the coronavirus pandemic, address the country's economic distress and bring arms under state control, Mr Pompeo said.
"We welcome that Shia, Sunni, and Kurdish political leaders seem to have arrived at a consensus on government formation, and hope the new government puts Iraq's interests first and meets the needs of the Iraqi people."
Iraqi President Barham Salih last week named Mustafa Al Kadhimi, the head of Iraq's intelligence service, as prime minister-designate after two previous nominees failed to win parliament's backing.
Mr Al Kadhimi was given 30 days to form a cabinet and present it to parliament for approval.
"The Iraqi people demand genuine reform and trustworthy leaders," said Mr Pompeo.
"These demands deserve to be addressed without violence or suppression. We stand with Iraqi people as they seek a sovereign, prosperous Iraq, free of corruption and terrorism."
Iraq has faced weeks of political deadlock after the largest parliamentary blocs failed to agree on a successor to Adel Abdul Mahdi, who resigned as prime minister in November.
Washington said last week that it would hold talks with its allies in Baghdad to review their military and economic relations.
The dialogue would be held in June and was expected to be led by David Hale, a state department diplomat. It would be based on the future of US troops stationed in the country after they faced a series of attacks by Iranian-backed Iraq armed factions.
US-Iraq relations are based on a framework agreement signed in 2008, which calls for close defence co-operation to deter threats to Iraqi "sovereignty, security and territorial integrity".
An American drone strike which killed Iranian general Qassem Suleimani in Baghdad in early January escalated tensions between Washington and Iran and angered Iraqi officials.
The move prompted parliament to vote for the expulsion of foreign troops from the country.
More than 5,000 US troops remain in Iraq, most in an advisory role, as part of a US-led multinational coalition against ISIS.