The Iberian rivals were both drawn into Group B for this summer's competition, and will lock horns in Sochi on June 15.
Portugal are the reigning European champions following their success at Euro 2016, and Iniesta is more than aware of the dangers facing La Roja, particularly in the shape of Cristiano Ronaldo.
"Portugal is a team that takes a lot to defeat and we will have to perform at the highest level, in a World Cup any small thing can knock you out," Iniesta told Cadena Cope.
"Cristiano is a fundamental player for any team he is in and for Portugal as well."
Spain beat Portugal on penalties in their last meeting in the semi-finals of Euro 2012.