Iran's deputy oil minister says Iraq has cleared its debt for gas imports but confirmed there are problems in transferring money from the Arab state.

"The Iraqi Ministry of Electricity has paid all our gas claims and this debt is now zero, but sometimes there are problems in transferring money from TBI Bank of Iraq to Iran," said Majid Chegeni on Sunday.

On June 16, the spokesperson of the US State Department confirmed the reports about the release of 2.76 million dollars of frozen assets of Iran in Iraq.

The mechanism by which the money would be released remains murky, but Washington claimed it is part of a number of humanitarian transactions which have been taking place consistently over years since the previous administration.

“Iran can only access its funds held in accounts for Iraq for humanitarian and other non-sanctionable transactions,” said Matthew Miller.

Yahya Al-e Eshaq, the head of the Iran-Iraq chamber of commerce, was quoted by local media saying the Iraqi debt is between $7 to $8 billion but only $2.7b has been agreed to be released and that part of the funds has been earmarked for pilgrims and another portion has been used to purchase basic goods.

Last Monday, Iranian lawmaker Hassan Norouzi claimed that the money will be provided to the Hajj pilgrims in forms of subsidies to buy dollars at a slightly lower rate. However, he criticized the decision, saying that the money belongs to the Iranian public.