At 23.17 hours on 15 January 1942 the unescorted Diala (Master Herbert John Adler Peters) was torpedoed and damaged by U-553 (Thurmann) about 300 miles east-southeast of Cape Race in 44°50N/46°50W. The vessel was proceeding at maximal speed (12 knots) after convoy ON-52 was dispersed on 11 January. The bow was blown off and the superstructure was extensively damaged. The tanker was abandoned by most of the crew in lifeboats and on rafts but remained afloat and drifted northeast in a heavy gale. The master, six crew members and one gunner who had aboard were eventually taken off by the British steam merchant Telesfora de Larrinaga and landed at New York on 29 January. However, none of the lifeboats or rafts were ever found: 49 crew members and nine gunners were lost.

Twelve survivors from the Athelcrown, which had been sunk by U-82 (Rollmann) on 22 January, boarded the abandoned and drifting wreck of the Diala. They remained on board for eight days before they were rescued by the Swedish motor tanker Saturnus. On 19 March, the drifting wreck was last seen by Allied ships in position 47°N/37°W, after attempts to tow her were unsuccessful. The wreck of the Diala was finally sunk by U-587 on 23 March.