"They've had two really, really good performances in the World Cup", he said, adding: "The last one was a shining example of how good Croatia is but that also gives us confidence because we were ahead of them in our [qualifying] group and have already beaten them once in Iceland".
Nigeria sweep aside Iceland to set up showdown with Argentina after Ahmed Musa strikes twice against Iceland.
"I think the control made it more ideal for me", said Musa, who hinted he wants to leave Premier League club Leicester and play for CSKA Moscow.
However, while Nigeria's players have more experience of playing in Europe's top leagues, Iceland will rely again on the strength of their collective bond which has helped them overcome far bigger rivals.
Given Iceland's penchant for defending first and then launching counterattacks, Nigeria's sense of urgency seems likely to play into the hands of Hallgrímsson's side, though he remains modest about how his team stacks up against the Super Eagles.
It's rare at this stage not to have a clear favourite in the betting - indeed, most games feature an odds-on jolly - yet here it's 19/10 Nigeria and 17/10 Iceland with 11/5 for the draw.
Nigeria almost doubled its lead on several occasions, but Musa made it happen in the 75th minute.
"It's possible I'm going to score another two goals", the 25-year-old Musa said.
Iceland were given a lifeline when Finnbogason was fouled inside the box by Tyronne Ebuehi, with the penalty awarded after video review.
"We can't dwell on that game now", captain Aron Gunnarsson told reporters earlier this week.
The African side will secure a spot in the knockout stage if they beat Argentina on Tuesday in Group D's final round of fixtures.
Coach Heimir Hallgrimsson said things had been going to plan with the scores 0-0 at halftime but the heat of Volgograd, with temperatures of around 30 degrees Celsius (86°F) throughout the game, sapped his team.
A draw would be enough to eliminate the Argentines but would leave Nigeria's fate resting on the outcome of Iceland's game against Croatia which kicks off at the same time.