[1] The two states were created after World War I from former Ottoman dominions by way of a secret bilateral agreement between the United Kingdom of Great Britain and Ireland and the French Third Republic.

As the two original Hashemite monarchies established in Western Asia by Britain following World War I and the collapse of the Ottoman Empire, Jordan and Iraq had initially maintained close relations based on family ties.

In 1979 Iraq initiated contacts aimed at closer alignment at a time when the newly established President Saddam Hussein was seeking Arab allies, perhaps to provide for at least some level of transnational support and inter-Arab legitimacy for his régime.

The Hashemite government viewed Iran as a potential threat not from military expansion, but as a supporter and living example of Islamist revolutionary militancy against conservative pro-Western monarchies.

For King Hussein, Iran was a threat not just to his régime's security directly, but also indirectly in so far as it threatened the Persian Gulf Arab monarchies oil which Jordan was partially reliant for aid.

To expand on these political-economic linkages, Jordan helped create the Arab Cooperation Council (ACC) in 1989, in the immediate aftermath of the Iran-Iraq war.

The ACC alliance of Jordan, Iraq, Egypt, and Yemen was meant to facilitate capital and labor flows between members while also allowing them to act as a fairly formidable lobbying bloc within inter-Arab politics in their mutual efforts to renegotiate their debt terms with the Persian Gulf Arab monarchies.

After Banna's family gave him a heroic funeral in Jordan, thousands of Iraqi Shia protested, and the two countries recalled their respective ambassadors.

Iraq, which sits on the region's third largest oil reserves after Saudi Arabia and Iran at 115 billion barrels, hopes the move will increase and diversify its exports.

[4][5] Iraq's contribution to the world's oil supply will significantly increase to more than 8 million barrels a day by 2035, outstripping its current output, according to the International Energy Agency.

[8] Before the instability in the province, 70% of the exports originating from Jordanian Free Zones went to the Iraqi market,[9] but after the sudden takeover of Mosul and other parts of Iraq in June 2014 the trade decreased by 19% for the period of June–September 2014 compared to a year before.