What is the right course of action?

Your choice “before the two cars” is correct because this is an uncontrolled intersection (no priority signs or traffic lights for you), so the basic German rule applies: right before left. The blue car is coming from your right, so it has priority and must go first.

At the same time, you are turning left. When turning left, you must additionally yield to oncoming traffic that is going straight or turning right. The yellow car is oncoming and is going straight, so you must also let it pass.

So the order is: first the blue car (right-before-left), then the yellow oncoming car (left turn yields to oncoming), and only then you may turn left. That means you go after both cars, not before them.