At 09.41 hours on 15 Jan, 1942, the unescorted Coimbra (Master John Patrick Barnard) was hit by one G7e torpedo from U-123, which had spotted the lights of the tanker astern while the U-boat was proceeding eastbound following the southern shore of Long Island. The torpedo struck on the starboard side just aft of the superstructure. A huge towering explosion lit up the night sky and the cargo of oil quickly caught fire and spread across the water. Residents from the Hamptons on Long Island could see the fire at sea 27 miles away and alerted the authorities. At 09.59 hours, a coup de grâce hit the tanker underneath the funnel and her stern settled fast, striking the sea floor after five minutes. Like his previous victim, the Norness, the bow of the Coimbra was sticking out of the water. Hardegen commented: These are some pretty buoys we are leaving for the Yankees in the harbor approaches as replacement for the lightships. The tanker later sank completely.

The master, 29 crew members and six gunners were lost. Ten survivors, six of them wounded were rescued from the rough seas. Two crew members were picked up by USS Rowan (DD 405) and landed at Argentia, Newfoundland. The remaining survivors were rescued by another American destroyer and landed at St. Johns.