It is assumed that the Halo was shelled and damaged by U-130 (Kals) on 27 Jan 1942, but this can not be confirmed from the KTB. Unconfirmed is also another attack by an unknown U-boat on 11 or 27 Mar 1942.

At 07.58 hours on 20 May 1942 the unescorted and unarmed Halo (Master Ulrich Fred Moller) was hit by two torpedoes from U-506 about 50 miles from the Southwest Pass of the Mississippi River, while proceeding on a rapidly changing zigzag pattern at 10.4 knots. The first torpedo struck on the starboard side under the bridge and completely destroyed this part of the ship. The second hit aft of the bridge but forward of the engine room. The second explosion broke the ship in two and ignited the cargo. The tanker plunged bow first with her propeller still turning and sank within three minutes. 23 men of the crew of eight officers and 34 men managed to leave the ship, but only one raft was left, the four lifeboats and three other rafts were destroyed by the explosions and fire. The survivors huddled together clinging to wreckage in the water near the sunken ship throughout the night and the next day. The oil on the surface burned for six hours. Two men cling to a half-burned raft and stayed on it for seven days without food or water. They were then picked up by Otina and taken to New Orleans.
The other survivors in the water began dying from exposure and injuries. On the third day wreckage ascended from the tanker and the seven remaining survivors tied boards together with strips of canvas torn from their life preservers. Crude oil also floated free forming a layer four inches thick. Five days after the sinking, the Oaxaca picked up the three remaining survivors, but one of these men died at sea. The two men arrived at a hospital in Tampico on 28 May, but one men died 30 minutes after arriving. Thus, only one officer and two crewmen survived the sinking.