Zidane Iqbal scored the only goal of the game with 14 minutes remaining to maintain Iraqi dreams of a first World Cup appearance since 1986 and set up a winner-takes-all meeting with Herve Renard's team.
Both sides go into the final game in Group B of Asia's fourth round of preliminaries with three points and victory for either side would secure automatic qualification for the expanded 48-team finals in North America.
"It's the dream for the players to go to the World Cup," said Arnold, who guided his native Australia to the 2022 tournament in Qatar.
"I just felt probably a bit today, because it was the first game, in the first half the pressure got to us a little bit.
"But now all the pressure is on Saudi Arabia. They've had five days (since their last game, a 3-2 win over Indonesia). They're in a hotel thinking about this game and the players will be thinking a lot about that.
"It's tough when you have a nation like Saudi Arabia and the pressure that's put on the players."
Arnold's side will hope for a more convincing performance than the one shown against the Indonesians, when the Lions of Mesopotamia were second-best throughout the opening 45 minutes.
The introduction of Iqbal at the start of the second half boosted Iraq, however, with the Utrecht midfielder scoring from distance to break the deadlock and extinguish any lingering hopes Indonesia had of reaching next year's finals.
"Proud of the boys, the effort and the work they put in but I do know we can do better," said Arnold.
"We've achieved nothing yet. We've won one game and that's good, but the most important thing is recovery, to get good sleep and we get ourselves ready for Tuesday night.
"The discipline of the players and the fight and the effort was fantastic. But I just want to say to all the Iraqi people and fans: Don't celebrate yet, we've still got one more game to go."