Ok, getting boxed in and out-teched is a way to lose on such a start.
Setting up a block to the north is a valid reaction.
Alternatively, you could have rushed with Axemen.
The rush has the more upsides but is also the riskier route.
Blocking off land is safer but will delay your development (harder to develop a stretched out Empire than a compact one).
--> Catapults now seem the earliest unit you can use to break out (maybe optimistic ?).
Depending on how much you focus on research, expansion and wonders, they may not be a valid option. (The more wonders you target, the more cities you found, the harder it will be to use an early unit.)
--> Macemen are conceivable.
Try and get a feeling of how many cities you want / will have by then.
It will be that much easier to plan an invasion.
To develop your land, some stakes are competing.
a) if you settle clams/rice/gems where you are, you'll need a 3rd city to complete your northern block
b) Sailing will be much needed to set up trade routes (conveniently enough, it will also grant you foreign trade routes)
c) Stone is very far away (--> Sailing) and doesn't have food. Is it worth sending an early settler over there ? How would that affect the development of your Empire ?
I'd consider claiming it in the 3rd ring of a city (starting on a Library... still would take 35+ turns to grab).
d) Gems are jungled. That means you want to enter the Classical Era sooner than later (^^) to unlock them. Going for land grabs, however, will delay your research, while Sailing is a detour.
If I were in this position, I'd fully play the "settle in your face" game (and maybe build a few archers/axes when they are affordable and Stalin gets offensive units).
--> finish scouting Stalin's border
--> settle a 3rd city over there to complete the block
--> backfill "leisurely", starting with copper/fish/sheep, and trying to find a balance between research (unlocking gems) and expansion (the earlier the cities are settled, the better)
--> possibly invest in a wonder in Athens
Once you can Open Borders, you'll also need to look for the remaining AIs,
And it may be worth it to check those islands around you.
And you'll have to keep an eye on your worker count
Yes, that's a lot, that's the strain of such land grabs