Why are you not allowed to overtake here?

Your answer is correct.

In this situation, overtaking is not allowed because the space to the cyclists is too narrow for safe passing (option 1). When there are multiple cyclists riding close together near the edge of the road, you must maintain a safe side clearance to avoid endangering them.

Also, overtaking here may cause danger to oncoming traffic (option 2), since the road curves and you may enter the opposing lane to pass, reducing your control and visibility.

Crossing the centre line (option 3) is not explicitly prohibited here as the line is dashed and allows overtaking in principle, but the main reasons for not overtaking are the narrow side clearance and the risk to oncoming vehicles.

So, remembering that you must consider both the safety of vulnerable road users like cyclists and oncoming traffic is key when deciding whether to overtake on such roads.