If Spain had the capacity to, I think what you're saying is plausible.

However, Spain was probably one of the weakest military and economic entities in Europe at the time. In terms of military capability and economic resilience they were probably somewhere around Hungary or Bulgaria and well below Romania or Finland. Spain's major problem is that she had just waged a costly civil war, and her economic output was nearly non-existent.

In that situation, I doubt they could seal off the Mediterranean. In fact, they would most likely find themselves as the third front where German forces would be tied up.

Still, if the Spanish were even as competent, or incompetent, as the Italians they may have been able to do as you've suggested and that probably could have significantly influenced the outcome of the war.