Khurshid, the first Indian minister to visit the war-ravaged Iraq in 23 years, met Prime Minister Nouri al-Maliki besides having talks with his counterpart Hoshyar Zebari.
The two countries agreed to revive the ties and in the process decided to hold a meeting of Joint Commission in Baghdad before Ramadan, which begins in July second week.
The two sides discussed the entire range of issues and avenues of partnership including energy security.
Oil Minister Veerappa Moily is likely to visit Iraq on July 8 for Joint Commission Meeting, sources said.
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Till recently, Iran was India's second-biggest crude oil supplier after Saudi Arabia, meeting about 12 per cent of the country's needs. But India has reduced its dependence on Iranian oil in the wake of US and European sanctions on the import of oil from the Islamic Republic.
Khurshid also handed a letter of invitation from Prime Minister Manmohan Singh to Iraqi Premier al-Maliki to visit India which he accepted.
Khurshid also met Iraqi Deputy Prime Minister and Energy Minister Hussein al-Shahristani and discussed cooperation in the oil sector.
Earlier in the day, Khurshid met with Iraqi National Security Advisor Saleh Al-Fayyadh and discussed cooperation in various fields.