At 06.14 hours 3 July 1942 the unescorted Gulfbelle (Master Charles P. Wahl) was hit by one torpedo from U-126, while zigzagging at 11 knots 21 miles north of Tobago. The torpedo struck on the starboard quarter, ripped a hole 40 feet square, wrecked the engine room and caused the turbine to fall out of the ship. One officer and one crewman on watch below were killed and two other men seriously injured, one of them later dying of injuries. The armed guards fired one round from the 5in gun, her only armament, at a range of 300 yards on the surfaced U-boat. The shell passed over U-126 which then immediately submerged. At this time most of the crew of eight officers and 33 men had abandoned the ship in three lifeboats, because they did not clearly understand the order from the master to stand by their abandon ship stations. The master, four crewmen and the eight armed guards at the gun remained on board. Two boats drifted away in the choppy seas and were picked up by HMS Warwick (D 25) (Cdr Y. McCleves, DSO, DSC, RNR). The crew in the #4 boat reboarded the ship later and were subsequently transferred to the same destroyer, which towed the tanker to Port of Spain, Trinidad.

The Gulfbelle was towed to Mobile, Alabama, arriving on 8 September. She was repaired and returned to service in July 1943.