I doubt that Franco would have just willingly given in to Hitler which means Spain resists invasion and the inevidable occupation that would follow. This puts Hitler off on any Battle of Britain at a serious level as the Luftwaffe will be needed to support operations in Spain and the Med.
But, if we assume that Hitler does invade Spain (and Portugal) he gets for his trouble a greatly increased coastline to defend and two more countries requiring occupation forces.
Also, the fall of Gibralter does not necessarily mean that Malta will fall. Short of an invasion it is likely to remain a pain in the German backside to operations in North Africa.
As to the later, the biggest problem for the Germans in North Africa was their abomidable supply system. At the Alamein position they were using 4 gallons of gasoline to deliver one to the front. And, this does not account for wastage which in itself was substancial. Basically, there really is little likelihood of Rommel succeeding in taking all of Egypt. As for dominating the Atlantic using the Italian fleet. Ain't gonna happen. The Italians have no at sea refueling capacity (although the Germans do) and their ships are realtively short legged. What was left of the Italian fleet after Matapan and Taranto was mainly smaller units; almost all of their battleships were out of action.