Most or many players will have noticed that the Italian Fleet is vulnerable to the UK on turn 1 if both the UK fighter in Egypt, and the destroyer+cruiser combo in SZ 12, live.
A UK bomber+fighter+cruiser+destroyer versus an Italian battleship+2 cruisers is about a 55% UK win (netting a transport as well) and 65% to kill just the warships. I think most would agree if the Italian navy goes, its pretty much game over, as a full tilt KIF strat will succeed.
The German attack on Egypt is maxed at 3inf+2tanks+1art+1bomber versus 2inf+tank+art+ftr
which is about a 75% win for the attacker (a draw, around 80%, does the job as well, but if the final round of combat came down to bomber versus fighter, and the bomber missed and the fighter hit, it might be time for the Germans to call it a day…)
The attack on SZ 12 is 80% to win for the Germans, sending in 2subs and a fighter - though they could do this light (sub+ftr or two subs), given that it is only absolutely necessary to kill the destroyer.
So, given that it is a must that the Germans secure the Italian navy, the German player must a) attack egypt b) attack sz12 or c) both
If b or c, then then one obvious cost is not sinking the British battleship+trans, which is both slightly easier to kill than the dest+cruiser, and also a bigger prize.
The only problem with option a is that it fails 25% of the time. Not a brilliant prospect, especially if you are better than your opponent, and hope to grind out a long and sure win.
The problem with b is ignoring Egypt. The multitude of consequences other than leaving the Italians vulnerable, is more than obvious I would think.
To my mind, c is the only answer.