BAGHDAD (BLOOMBERG) - Iran closed its border crossings with Iraq after deadly clashes erupted in Baghdad over a decision by a prominent Shi'ite cleric to step back from politics, deepening a government crisis in the OPEC-member state.

At least 15 protesters were killed after supporters of the cleric, Muqtada al-Sadr, clashed with security forces, the Associated Press reported on Tuesday (Aug 30).

Violence gripped Baghdad late on Monday with demonstrators storming the government palace forcing the government to later suspend cabinet sessions.

United Arab Emirates carrier, Emirates, cancelled flights scheduled for Tuesday due to the unrest.

Iraq's military announced a nationwide curfew.

As the second-biggest oil producer in the Organisation of the Petroleum Exporting Countries, any disruption to Iraqi output could sway global markets.

However, street violence has so far been reported in the centre of Baghdad, far from Iraq's main oil producing and export hub of Basra in the south and other important areas to the north of the capital.

Iran closed its border with Iraq to millions of pilgrims who'd planned to go to the Iraqi city of Karbala on foot for the annual Arbaeen pilgrimage, Iran's state-run Islamic Republic News Agency said.

Iran also plans two emergency flights to evacuate Iranian pilgrims from Najaf, south of Baghdad, on Tuesday, the report added.

Iraq has been at a political impasse since Mr Sadr's party won the most seats in parliamentary elections last October.

He's not been able to form a government with his Shi'ite rivals who are backed by Iran and a caretaker government has been in place.