Iraqi Prime Minister Haider al-Abadi arrives for the second day of a NATO summit in Brussels, Belgium, July 12, 2018. Tatyana Zenkovich/Pool via REUTERS

BAGHDAD (Reuters) - Iraqi Prime Minister Haider al-Abadi stepped back from his commitment to abide by new U.S. sanctions on Iran on Monday, saying his government would only respect the dollar ban in transactions with Iran.

“I did not say we abide by the sanctions, I said we abide by not using dollars in transactions. We have no other choice,” Abadi told a news conference in Baghdad.

Last week he said Iraq disagreed with the U.S. sanctions on Iran but would abide by them to safeguard its own interests, triggering criticisms from Iran-allied Iraqi politicians and in the Islamic Republic.

The United States and Iran, increasingly at odds, are Iraq’s two biggest allies and the sanctions put Abadi’s outgoing government in a difficult position.

The sanctions target Iran’s trade in gold and other precious metals, its purchases of U.S. dollars and its car industry.

Asked if Baghdad would stop imports of commodities, appliances and equipment by government companies from Iran he said the matter was still being reviewed.

“We honestly have not made any decision regarding this issue until now.”