Iran trade deal eases fears of blockade on Iraqi-Kurdish territories
Erbil's two political chambers agreed to a boost in trade with Tehran of around $200 million, which will see further exchanges between Iraq's KRG and Iran.
It comes as rumours that Erbil's planned independence referendum in September could see neighbouring countries - which have sizable Kurdish minorities - close their borders in retaliation.
The trade agreement should ease some of those fears of a blockade by Iran on the KRG, despite Tehran's continued opposition to the vote.
"The two protocols of understanding were to continue trade relations between both sides as well as developing them without facing any interruptions in the future," said Mustafa Abdulrahman, chairman of the Union of the Kurdistan Region Importers and Exporters, according to Kurdistan 24.
"The protocols emphasised on the opening of an Iranian trade office in the Kurdistan Region and vice versa. It also highlights the importance of the development of the border crossings between both sides."
KRG plans a vote in its territories in September on independence from Iraq.
The unilateral decision by Erbil has raised tensions with its neighbours and the Iraqi government.
Iran - which is a major backer of Baghdad and has restless minorities of its own - strongly opposes the vote.
"Although [the independence vote] might be attractive in appearance it will isolate and pressure the Iraqi Kurds and weaken Kurdistan and finally all of Iraq," said Ali Shamkhani, secretary of Iran's Supreme National Security Council last month.
"A peaceful, stable and united Iraq is what gives the country security and development. Friendly and neighbouring countries should support Iraq."
Turkey, Syria and Iran have large Kurdish populations with armed independence movements with control, sympathy or influence in huge areas of these countries.
An "independent" Iraqi-Kurdistan would be a major morale boost for these groups and potentially strengthen their claims for autonomy.
Baghdad steadfastly opposes any move towards the division of Iraq.
An offensive against the Islamic State group in Iraq has seen pro-Baghdad Shia militias and Iraqi troops on the doorstep of the KRG territories.
The potential divisions while the fight against IS continues has seen Erbil's western backers - such as the US - appeal for calm.
US Secretary of State Rex Tillerson has reportedly urged the KRG to postpone its vote, at least until the war against IS finishes.
He told KRG President Masoud Barzani in a phone call this week that the referendum will "distract from more urgent priorities".
Erbil has rejected the appeal and said the vote will go ahead on 25 September.
"On the issue of the postponement of the referendum, the president stated that the people of the Kurdistan Region would expect guarantees and alternatives for their future," a statement from the KRG read.
The Kurdish president's adviser said "the date is standing, 25 September, no change", according to Reuters.