In 1940, the German high command sent a panzer expert, Major General Wilhelm von Thoma, to North Africa to find out whether German forces should help the Italians, Bevin Alexander explains (in How Hitler Could Have Won World War II) — and also, unofficially, to look over the Italian army in action (or rather inaction):
Thoma reported back that four German armored divisions could be maintained in Africa and these would be all the force necessary to drive the British out of Egypt and the Suez and open the Middle East to conquest. At the time Germany possessed twenty panzer divisions, none being used.
Hitler called Thoma in to discuss the matter. He told Thoma he could spare only one panzer division, whereupon Thoma replied that it would be better to give up the whole idea. Thoma’s comment angered Hitler. He said his concept of sending German forces to Africa was narrowly political, designed to keep Mussolini from changing sides.
Hitler’s comments to Thoma reveal he didn’t see the road to victory through Suez that Raeder had pointed out to him. If he had, he would have insisted on committing German troops.
Hitler’s interest was focused on keeping Mussolini happy and on wild schemes like assaulting Gibraltar. He had not absorbed Raeder’s strategic insight. His mind remained fixed on Russia. He was hoarding his tanks to use there. That’s why he couldn’t spare more than a single panzer division for Africa.
How do you take Gibraltar without having Spain on your side (which Hitler tried, and failed, to get) or a navy that can stand up to the royal navy?
Alexander recommends coming from the other direction:
This supposes that the Soviets were going to stay out. It looks to me that they were planning on war since the previous year when they and the Nazis couldn’t agree on Romania. The Nazis couldn’t give up the Ploesti oil fields, and the Soviets couldn’t allow airbases which could shut down black sea shipping routes. There had been low intensity fighting between USSR and Romanian troops since those talks broke down.
It looks like the Soviets were planning on invading in September and to this end had marshalled lots of armor in the south to cut Romania off from Germany. They had constructed fifty airfields close to the front lines – which was well suited to keep up with an advance, but not very defensible.
Possibly they could have bought more time by ceding Romania, but if airfields in range of the black sea was and existential issue for the Soviets, how would they view the East Med falling into Nazi control?
In OTL El Alemain kicked off 1 Jul 1942. Rommels tactic of outflanking to the desert would no longer work, and when they leave the desert, infantry and fortifications would regain some of their relative power. The UK would pour in all kinds of colonial and regular trips into this front. I’m guessing it would have taken at least two months and probably longer to fight through the irrigated zone and breakout to the the canal. Taking Malta would improve their supply lines, but it would still be really long ways by truck, until the UK fleet abandoned the east med.
Couple thoughts:
USSR on offence in 1942, without US help, would have been easily parried indefinitely by Germany.
The Suez Canal looks to be easily blocked by a few scuttled ships. Seems an earnest German effort could have gained the Middle East.