The attack Tuesday unfolded in the northern commercial district of Shaab, where police Capt. Ali al-Obeidi said the gunmen first shot five guards at the open-air lot that served as a parking area and small market.
As bystanders rushed to the scene to rescue the victims, a car bomb blew up next to an oil tanker, which exploded in a fireball. AP Television News footage showed the remnants of an exploded car and sandals and clothes of the dead and injured.
The attack seemed to be aimed at killing as many people as possible. The motive was unclear, but it may have been sectarian.
Police also said a United Arab Emirates diplomat was kidnapped in Baghdad late Tuesday. The diplomat was not identified. At least six other Arab embassy workers have been kidnapped since the fall of Saddam Hussein's regime, some by Al Qaeda in Iraq to undercut support for the U.S.-backed government among Arab countries.
Escalating violence across the country left at least 36 people dead Tuesday as Iraq's prime minister-designate announced he was close to forming a new government before a May 22 deadline — though other groups claimed there's a long way to go.
Any final agreement appeared to hinge on whether the largest Shiite bloc in parliament could strike a deal with the largest Sunni Arab bloc over the interior and defense ministries.
Prime Minister-designate Nouri al-Maliki said his Cabinet was "mostly complete" after meeting with deputies from the Shiite United Iraqi Alliance party, which controls 130 seats in the 275-member parliament.
At least one Western diplomat in Baghdad who was well informed about the negotiations said he thought al-Maliki would name a full Cabinet by Monday's constitutionally mandated deadline. He did not want to be identified because of the sensitivity of the talks.
But Sunnis — represented by their dominant bloc, the Iraqi Accordance Front — have pressed for a complete deal. They have insisted on the Defense Ministry, which controls the army, to offset the Shiite-dominated Interior Ministry, which controls the police.
Khalaf al-Ilyan, a senior deputy with the Accordance Front, complained that al-Maliki had not yet "announced whether the Defense Ministry has been given to the Accordance Front or not," and said that Sunni Arabs would insist on the portfolio "because we represent half of the society"
Many Sunni deputies have also expressed disappointment because of perceptions that they may not get the ministries they expected after turning out in large numbers for the Dec. 15 elections.
"There is a wide gap between what was promised and what was realized, and this is a situation that affects the security of the entire country," said Accordance Front deputy Dhafer al-Ani. "This goes directly to our ability to address the needs our constituents. None of the ministries (we received) has any relation to the needs of the Sunni constituency."
Under a deal worked out so far, the Sunnis will receive the ministries of planning and higher education. They also want a services ministry such as health or agriculture, but none is as important to them as defense.
The reason for the parking lot attack was unclear, but religion was clearly behind the bombing of a liquor store Tuesday. It was the third attack on the shop, one of a few remaining stores in the Iraqi capital selling alcoholic drinks. Islamic militants have demanded that such shops close, although liquor is not banned in Iraq.
In the day's other attacks, at least six civilians were killed and four were wounded in crossfire when a gunbattle broke out between insurgents and police in Baghdad's Sunni-dominated Dora neighborhood.
Suspected insurgents also killed four Iraqis who work at a U.S. base in Taji when they opened fire on the workers' minivan in northern Baghdad. Eight others riding in the van were wounded, police said.
Masked gunmen also killed Abbas Ali Dhahe, a Shiite who was deputy dean at Baghdad University's college of business and administration. Three of his bodyguards were wounded, said police, who reported an additional five people died in other attacks or shootings around Iraq.
Before Tuesday's attacks, at least 3,706 Iraqis had been killed in war-related violence so far in 2006 and at least 3,978 wounded based on Associated Press reports, which may not be complete because the report process does not cover the entire country. During May, at least 511 Iraqis have been killed and at least 537 wounded.
A U.S. soldier died when a roadside bomb exploded near Rasheed airfield, a former Iraqi air force installation in Baghdad. Two other soldiers were killed Monday when their vehicle struck a roadside bomb near Balad, 50 miles ( 80 kilometers) north of Baghdad.
Those attacks raised to at least 2,449 the number of members of the U.S. military who have died since the start of the war in 2003, according to an AP count.