At least 100 people have died after a suicide truck bomb exploded at a petrol station in Iraq.

The so called Islamic State has claimed responsibility for the attack which left a further 45 people injured.

The blast occurred in the city of Hilla 100 km south of Baghdad on Thursday.

It is thought the target may have been buses carrying Iranian pilgrims, who were heading home after celebrating a major Shi’ite religious holiday in Karbala.

A truck packed with 500 litres of ammonium nitrate exploded at the petrol station in what is the deadliest single attack on Iranian nationals by the terrorist group.

Although Iran is extensively involved in the fight against Islamic State in both in Iraq and Syria, it has remained largely untouched by suicide bombings. 

About 3 million Iranians are believed to have travelled to Iraq this week for the annual Shia commemoration of Arbaeen, an important day in the Shia Muslim calendar.

Arbaeen marks the 40th day of mourning for the killing of Imam Hussein - a grandson of the Prophet Mohammad - in the 7th century AD.

The targeted petrol station has a restaurant on its premises that is popular with travellers and five pilgrim buses were destroyed in the blast, a police official said.

Islamic State has intensified attacks over the past month in areas out of its control in efforts to weaken the offensive launched retake Mosul, the last major city under the militants control in Iraq.

Iran's Foreign Ministry condemned the attack and pledged to continue to support Iraq's ''relentless fight against terrorism."