What is the right course of action?

Your choices 1 and 2 are correct.

Here you are on a priority road (yellow diamond). The extra sign shows that the priority road bends to the right at the junction. That means traffic coming from the right-hand side street (the blue vehicle) is not on the priority road and must yield to you as long as you follow the priority road’s direction. So you have to allow the blue vehicle to pass (answer 1).

The green vehicle is coming from straight ahead on the same priority road. Between vehicles on the same priority road, the normal “right before left” rule does not decide anything; instead, the turning rule applies: anyone turning left must yield to oncoming traffic going straight ahead or turning right. You are turning left, the green vehicle is turning left from the opposite direction too, so you can usually turn in front of each other (left-to-left) without either having to yield. That’s why you may make the turn before the green vehicle (answer 2), and you do not have to let the green vehicle go through first.

Rule of thumb for similar questions: First check who is on the priority road (including where it continues). Priority beats “right before left.” Only when you’re both equally ranked do you apply turning rules (left-turners yield to oncoming straight/right).