King Abdullah becomes the first reigning Saudi monarch to visit the Vatican.
Many Iraqi Chaldeans have emigrated since the war started in 2003 and the Vatican has expressed concern that a country with one of the most ancient Christian traditions could be depleted of its faithful.
Protected under Saddam Hussein, there were 700,00 Christians in Iraq.
It is now thought that only half that number remain.
The pope said: “Let us together reaffirm the solidarity of the whole Church with the Christians of that beloved land and invoke from the merciful God the coming of longed-for reconciliation and peace for all the peoples involved [in the conflict].”
He said in his sermon that he had chosen the Iraqi patriarch as a cardinal to express his spiritual closeness to suffering Iraqis.
Other new cardinals came from Germany, Poland, Spain, Ireland, France, Brazil and Kenya, Senegal, India, Mexico, Italy, Argentina and the US.
Emmanuel III, who is 80, said that the honour was for “all Iraqis”.
He said: “The title of cardinal that the pope has accorded me is not for my poor self alone but for all Iraqis, both those who still live in our tortured country and those who have emigrated.
“I will continue to serve Iraq and all the ethnic and religious groups of the country who should be united. I will serve my country, Iraq, to the last drop of my blood.”
He said the pope had referred to his nomination as a “sign of reconciliation… between Christians and all the Muslims, whether Sunni or Shiite”.
The pope has repeatedly called for dialogue between Christians and Muslims to combat intolerance and violence.