No it was not the North Sea and Baltic Sea that stopped Germany from invading Sweden. They conducted trade with Sweden for iron ore and there wasn’t much else they could gain from invading and taking the country over. Now they could have invaded through occupied Norway but the forces in Norway might not have been sufficient enough to take the country over and hold it.

By 1941, Germany had control of Norway and Denmark which were both good jumping off points if they wanted to invade Sweden. But the question you need to ask is if Germany needs to invade Sweden? The answer is no, as long as Germany and Sweden continue their trade there was no reason to invade. Now they still had to supply the troops and bring reinforcements to the area by sea but they had control of that area of water and the British weren’t keen on sending ships there yet, however resupplying by sea is still costly and must be planned very well. But in the end Germany would waste men and material for almost nothing gained aside from the iron ore and some other materials. Now they must keep a large presence there to mine the ore, make sure the populace is under control and that the country is under Nazi authority. With Germany also wasting resources on the Battle of Britain and the upcoming invasion of Russia, this is a waste of time and resources which Germany can not afford to waste.

Germany has no reason to invade Sweden as Sweden was fine with trade to Germany. Sweden was neutral during the war and Germany had no reason to invade and had bigger plans than messing with Sweden. It wasn’t the North Sea or Baltic Sea that stopped Hitler from invading Sweden, it was just common sense and pragmatism. There was no strategic reason to do so and Sweden could be left to its own devices for now.

Sources:

Ferris, John; Mawdsely, Evans: The War in the West, 1939-1940: The Cambridge History of the Second World War (Volume 1).

Maier, K., Rohde, H., Stegemann, B., Umbreit, H., McMurry, D., Osers, E. and Falla, P. (n.d.). Germany and the Second World War.