Appreciate very much the courtesy of a response. I am not sure it is as slam dunk as presented by you.
I’m not even sure they’ll have a solid enough oil supply to sustain prolonged combat operations in the USSR.
The primary source of German oil (as well as foodstuffs) is Romania. The Romanians have no replacement customers if it did not export to Germany, and Danube barge traffic is relatively secure. I do not envy the position of the Romanians in the OTL. They were indispensable to the German war effort and were rewarded by Hitler with having a quarter of her territory stripped and given to Hungary, whose contribution to the Axis was far less. Russian supply of oil was considerably less in 1939-40, but still important. The Germans will quickly capture the oil fields in Eastern Poland, and if the Red Army pulls back as you postulate, in Western Ukraine.
They have a hostile bloc breathing down their neck in the west which requires attention.
The best the British and French managed in the breathing down the neck department was the Phony War. Army Group C is quite capable of handling that. There is no evidence the Western Allies in 1940 had any offensive plans other than advancing to meet any German invasion of Belgium.
The Wehrmacht and German war effort has incredibly less resources and manpower available to them.
Not sure this is specific enough to comment. As far as total manpower, the Germans are better off - casualties in Norway, France, and Balkans have not been sustained; the occupation requirements do not exist; and there is no Afrika Korps commitment. On the other hand the amount of trained and experienced manpower is significantly less.
They have less combat experience and less equipment.
I am not sure the campaigns in the West are the right kind of experience for combat in Russia. The quality of intelligence available to the Germans was much higher, road networks, storage facilities for petrol and other supplies were well-known, and were calculated into sustaining a high tempo of operations. The USSR proved to be a much different and more difficult battlefield.
In the Heer, the problem will not be a lack of equipment, but lack of the right kind of equipment. For example, too high of a percentage of tanks are PzKw I and II; and the major lesson of the French campaign was the PzKw III needed upgrading to a 50mm gun and the PzKw IV to the 75mm/L43. However, Soviet tactical doctrine for employment of tanks is not much better than the French or British and the Germans in May 1940 have compensating factors. Among the most important is the T-34/76 is a year further from entering service. This is hardly a blessing for the Red Army.
Another significant compensating factor is the Luftwaffe. The top of the line Soviet fighter is the Polikarpov I-16 which is dead meat for the Bf-109E, and is 40 mph slower than the Bf-110C. It is backed by the earlier I-15 biplane in significant numbers. The MiG-1 first flew in March 1940, and will not enter production until the autum. Its armament of one 12.7mm and two 7.62mm machine guns is a bit on the light side. The main Soviet bomber is the Tupolov SB-2, which is also approaching obsolescence. The Sukhoi Su-2 is not much more survivable. The much better Il-4 went into production in late 1940, but in the OTL its engine factories had to be dismantled and moved to the Urals which halted production for a year. The Soviets will fight for at least two years, and possibly longer with the Germans holding complete air superiority. German level and dive bombers will attack at will with little more than light AA to contend with.
They adopt a much slower approach which allows the Red Army to easily pull back and avoid major encirclements.
In the OTL, Stalin adopted the tactic of trading space for operational and tactical advantage only after being forced to by German successes. I believe the initial Soviet response will be to launch heavy counterattacks to eject the invaders from Mother Russia. Moreover, in the OTL, hundreds of thousands of Russian troops surrendered under the very mistaken belief that living in German captivity was preferable to fighting for Communism. I doubt the Soviet conscript in May 1940 would act much differently until educated in the same manner by the Nazis.