Iraqi authorities are usually quick to announce "terrorist" acts, often blaming the Islamic State group, which has continued to carry out attacks despite its territorial defeat in late 2017.

In the wake of the explosion, reports circulated on social media that it was a car bomb attack, but authorities later said the blast was not intentional.

"The explosion took place inside the vehicle... as it drove near a market" in Sadr City, a statement from the Iraqi military said.

The driver was killed and 12 people in the vicinity of the blast were wounded, it added.

"According to the investigation, the owner of the vehicle was transporting explosives on behalf of an armed group," a security source told AFP.

Security officials have reported previous incidents of accidental detonations of explosives in the possession of various Shiite armed factions.

An AFP photographer in Sadr City saw burned motorbikes and several charred cars.