"It's perhaps a bit late, but (Iraq is) trying to avoid becoming — long term — a battleground between the two sides," Majid Jafar, CEO of Crescent Petroleum, told CNBC's "Squawk Box Europe" on Monday.
Tensions between Washington and Tehran escalated earlier this month after a U.S. airstrike in Baghdad killed Iran's top military commander Qasem Soleimani. Iran responded by firing missiles at American targets in Iraq, but both countries now appear to have stepped back from further military actions.
Iraqis want to see "good relations" both on the economic and political fronts, but don't want "negative foreign interference" in their own domestic affairs, Jafar said. "They don't want to be used ... in a tug of war between two sides."
Instead, the country wants to achieve a "balance," he said.
While Iraqi Prime Minister Adel Abdul-Mahdi asked the U.S. to start working on a plan to withdraw armed forces from the country, Jafar said Baghdad wasn't "setting a deadline or kicking out" American troops immediately.
"Iraq didn't need this U.S.-Iran conflict, and is very hopeful that things have calmed down now," he said.
Jafar also weighed in on the unrest in Iraq.
"They've called for new government, new system of government that is non-sectarian, that is not corrupt, that actually delivers," he said.
"They are mostly young, male, almost all unemployed, with very little to lose, and patience is wearing thin," he added. "There is real pressure now to move forward with a new government, new elections."
Correction: Due to an editing error, this report has been updated to correctly identify Crescent Petroleum.