At 10.23 hours on 23 March 1942 the unescorted and unarmed Naeco (Master Emil H. Engelbrecht) was hit by the last torpedo from U-124 about 65 miles southeast of Cape Lookout, North Carolina. The U-boat attacked the tanker after abandoning an attack on a steam merchant and had missed with first torpedo fired one minute earlier. The torpedo struck on starboard side just aft of the mast and created a huge fireball. Fire engulfed the entire amidships superstructure and burning oil spurted out over the sea. The engines were secured and the surviving men among the eight officers and 30 crewmen on board prepared themselves to abandon ship, but two of the four lifeboats had been destroyed and a third swamped when it touched the water, because the ship had still headway. The tanker later broke in two, the stern section sinking at about 15.30 hours, while the bow section was scuttled by gunfire by USS Roper (DD 147) in the late afternoon.
Ten survivors got safely away in the last lifeboat and were picked up after four hours by the US Coast Guard cutter USS Dione (WPC 107), which also picked up two more from the sea. One men and four bodies were recovered from a raft by the American minesweeper USS Osprey (AM 56). A boatswain, who returned to the ship, was taken off by the American tug USS Umpqua (ATO 25). All survivors, including three wounded, were landed at Morehead City, North Carolina. The master, four officers and 19 crewmen were lost.