What is the correct course of action in this situation?

In this situation, you chose answer 1, which is correct. When there is an obstruction on your side of the road, like the parked van in this image, you must wait and allow oncoming traffic to pass before you proceed. The oncoming car has a clear path, so it has the right of way. This rule helps prevent conflicts and ensures safety when roads are partially blocked. Always yield to oncoming vehicles when your side is obstructed, unless there are specific signs or signals giving you priority.