During WWI, Spain was a neutral country. As a result, mail from Allied and Entente governments initially flowed rather freely through the country. However, following the German re-introduction of unrestricted submarine warfare in February 1917, and the resulting sinking of numerous Spanish vessels, Spain began limiting German mail traffic through the country.
Due to these limits, German agencies in Spain began sending mail to Germany via U-boat. This is one of those pieces.
This cover was sent from the German consulate in Seville, Spain, to a bank in Braunschweig, Germany. At that time, banks often acted as intermediaries for the mail. A note accompanying this cover indicated that the eventual recipient was assigned to a Coast Guard unit on the island of Norderney in the North Sea, and the sender was the recipient's father who worked at the Consulate in Seville.
A closer look at the cancels reveals a U-boat cancel underneath a Kiel machine cancel.
During WWI, German U-Boats weren't numbered in the system most are familiar with from WWII. Instead, they were "S.M." (for Seiner Majestät, or His Majesty's), then the class (ex. UB was a class of coastal torpedo attack boats) and number.
Unfortunately, the submarine number is not visible, but it appears the submarine was a UB class boat.
The truly interesting thing about the cancel is the date of the Kiel cancel. Most German submarines were surrendered to the Allies on 24-26 November 1918. This would indicate that either this submarine was not one of the majority that were surrendered immediately, or there was a several-day delay in forwarding the cover from the port to the Kiel post office.