Manchester City and Argentina forward Sergio Aguero scored the opening goal in the 19th minute, working space in a crowded area and slamming a left-footed strike high into the net.

However, Alfred Finnbogason was on hand to poke home an equaliser four minutes later.

Argentina captain Lionel Messi failed to convert a penalty in the 64th minute, becoming the first player in this year's tournament to fail from the spot.

Iceland goalkeeper Hannes Haldorsson was named Man of the Match for his seven saves, including diving low to his left to deny Messi's penalty.  

Both teams are playing in Group D alongside Nigeria and Croatia, who face off on Sunday at 05:00am AEST.