Kylian Mbappe scored twice in a Group I clash that was delayed more than two hours by severe weather, marking the second consecutive game in which Iraq have conceded two goals to one of football's elite forwards.
In their opener, Norway's Erling Haaland found the net twice in a 4-1 victory.
But the Australian coach is keeping his eyes firmly fixed on Friday's crucial final group match against Senegal, where Iraq's hopes of reaching the knockout phase hang in the balance.
"For me now, it's all about Senegal," Arnold said. "With... eight third-placed teams going through. You know, we've still got a chance."
Arnold praised his team's first-half performance despite Mbappe's opener from distance, but lamented how the lengthy weather delay seemed to disrupt their rhythm.
A costly goal-kick error immediately after the restart gifted France their second goal.
"Well, you know, there's nothing I could do except I showed probably a little bit longer footage of the first half at halftime to show them where France was obviously hurting us a little bit," Arnold explained.
"But it was more the players just had to sit and relax and keep relaxed and then get themselves obviously ready when we went back out there."
The Iraq boss had nothing but admiration for Mbappe's devastating display.
"He's an incredible player," Arnold said. "His speed is unstoppable. And that's why we defended a little bit deeper than I always do because if you leave space in behind and Mbappe's that quick, then he'll destroy you."
With Haaland and Mbappe both on the scoresheet in consecutive games against Iraq, Arnold sees an intriguing battle brewing.
"Haaland is scoring goals, and Messi's obviously scoring goals, and Mbappe. So it's going to be a very good competition between those three for the leading goal scorer."