CORRECTED-UPDATE 1-US asks Panama to strip flags from Iranian ships sanctioned by Washington

(Corrects year of withdrawal of flags to January 2023 in paragraph 3, not January of this year)

PANAMA CITY, March 13 (Reuters) - The United States has asked Panama to ban Iranian vessels sanctioned by Washington from using its flag, U.S. State Department special envoy Abram Paley said on Wednesday.

Paley said the request aims to prevent ships from being used for illegal actions such as supporting groups designated as Iranian terrorist organizations with oil sales.

In January 2023, Panama's maritime authority said it had withdrawn its flag from 136 ships linked to Iran's state oil company in the last four years. More than 8,000 vessels sailing with its flag.

Panama has the largest ship registration in the world, with more than 8,000 vessels sailing with its flag.

It is the world's largest provider of so-called "flags of convenience" that allow ship owners to register their vessels in a country to which they have no link in exchange for a fee and freedom from oversight. (Reporting by Elida Moreno; Editing by Sarah Morland, Chris Reese and Sandra Maler)