The two sides will sit down together on Tuesday, according to Iraqi Foreign Minister Hoshyar Zebari and U.S. Embassy spokesman Philip Reeker, amid U.S. allegations that Tehran is supporting violent Shiite militias in the country.
Zebari told The Associated Press by telephone Sunday that the discussions would be at the ambassadorial level and would focus on the situation in Iraq, not U.S.-Iran tensions.
Iraq's fragile government has been pressing for another meeting between the two nations with the greatest influence over its future, and Iran has repeatedly signaled its willingness to sit down. State Department spokesman Sean McCormack said last week that Washington also was ready to hold new talks with Iran on the security situation in Iraq.
The May 28 meeting marked a break in a 27-year diplomatic freeze between the U.S. and Iran and was expected to have been followed within a month by a second encounter. But following that meeting, U.S. Secretary of State Condoleezza Rice and other American officials said Iran had not scaled back what the United States claims is a concerted effort to arm militants and harm U.S. troops.
Tensions also have risen over Tehran's detention of four Iranian-American scholars and activists charged with endangering national security. The U.S. has demanded their release, saying the charges against them are false.
At the same time, Iran has called for the release of five Iranians detained in Iraq, who the United States has said are members of Iran's elite Quds Force - accused of arming and training Iraqi militants. Iran says the five are diplomats in Iraq with permission of the government.
As recently as Sunday, U.S. troops detained two suspected weapons smugglers who may be linked to the Quds force, the military said. The suspects and a number of weapons were seized during a raid on a rural farm compound in eastern Iraq near the Iranian border, according to a statement.
McCormack said the U.S. wanted to use the meeting to warn Iran against continuing its support for militants in Iraq. He offered no explanation for Washington's apparent change of heart about meeting with Tehran.
Iraq had hoped to arrange a higher-level meeting between Rice and Iranian Foreign Minister Manouchehr Mottaki, but the two exchanged only stiff pleasantries during a recent international conference on Iraq's security in Egypt.
The U.S. is pursuing a two-track strategy with Iran that reflects the high stakes in any engagement with a nation U.S. President George W. Bush accuses of funding terrorism and building a nuclear bomb.
Washington is reaching out tentatively with the talks on Iraq, but also keeping a check on Iran with the Navy conducting exercises in the Persian Gulf this spring and the U.S. pushing for new U.N. sanctions against Tehran over its disputed nuclear program.
The United States broke off diplomatic ties with Iran following the 1979 storming of the U.S. Embassy in Tehran and the holding of American hostages for 444 days.
Any direct talks between the two nations are rare, and even fleeting encounters at larger gatherings or diplomatic dinners are scrutinized for clues to their future relations.
Iran denies the U.S. allegations about its activities in neighboring Iraq, which like Iran has a majority Shiite Muslim population.
In Baghdad, meanwhile, two powerful legislators said Sunday that prospects were dim for passage of a U.S.-backed oil bill before parliament's August vacation, casting a new cloud over a pivotal September progress report that could weigh heavily on the future of the U.S. presence in Iraq.
American officials have pressed Prime Minister Nouri al-Maliki and parliament to pass laws the U.S. deems essential to restoring stability in Iraq, and the oil bill is at the top of the list.
American commander Gen. David Petraeus must report to Congress on progress in Iraq by Sept. 15, and the absence of legislative progress will make it difficult to issue a positive assessment at a time when there is flagging support in Congress for keeping American troops in the country.
Mahmoud Othman, a Kurdish lawmaker, and Abbas al-Bayati, a Shiite Turkman parliamentarian, said the oil legislation was not likely to be debated before September because political leaders have been unable to agree on a final draft of the legislation.
"There must first be political consensus between the major blocs on the law but there is not enough time for this to be done before the August break," said al-Bayati, a member of the United Iraqi Alliance, the largest Shiite bloc in the 275-seat house.
The draft oil legislation, approved by al-Maliki's Cabinet but not sent to parliament because of widespread opposition, calls for a fair distribution among Shiites, Kurds and Sunnis of the income from Iraq's massive petroleum resources.
Sunnis, who make up the bulk of the insurgency, have virtually no known oil reserves in their territories yet still oppose the current draft legislation. Kurds, who control large reserves in northern Iraq, oppose the measure because it could loosen their control over a key asset.
Also Sunday, the moderate Sunni Iraqi Islamic Party balked at joining a new Shiite-Kurdish alliance designed to exclude Shiite and Sunni militants and help achieve national reconciliation.
The Iraqi Islamic Party, the country's largest Sunni Arab political group, is a partner in al-Maliki's Shiite-dominated government. Its statement was likely aimed at extracting more political concessions from Shiite and Kurdish politicians in return for the Sunni group's participation in the so-called "alliance of the moderates."
So far, the talks on forming the alliance have included Iraq's two largest Shiite parties - al-Maliki's Dawa Party and the Supreme Islamic Council of Iraq - and the two main Kurdish parties - the Patriotic Union of Kurdistan and the Kurdistan Democratic Party.
Al-Maliki has called for parliament to cancel its monthlong vacation or at least limit it to two weeks to deal with legislative matters - a plea that has not resonated among lawmakers.
The infusion of about 30,000 more American forces, completed last month, was Bush's attempt to calm the capital and provide "breathing space" to pass the oil legislation. But so far nothing of consequence has reached the parliament floor and violence has persisted.
In the latest violence, Iraqi police and morgue and hospital officials reported at least 38 Iraqis were killed or found dead across the country Sunday.
The U.S. military also confirmed Sunday that Tariq Aziz, Saddam Hussein's former deputy prime minister, was hospitalized briefly in Iraq after a fall but was returned to a U.S. detention facility in normal condition. The 71-year-old Aziz became the public face to the outside world for Saddam's regime during his years as foreign minister.
Russia and Iran play in tandem to raise oil prices, while the tandem of the United States and Saudi Arabia has a goal to cause oil prices to collapse