How do Omnath, Locus of Mana and Ozai, the Phoenix King interact?

[[Ozai, the Phoenix King]] has the following replacement ability:

If you would lose unspent mana, that mana becomes red instead.

[[Omnath, Locus of Mana]] has the following static ability:

You don’t lose unspent green mana as steps and phases end.

Suppose a player were to control these two cards, and a [[Yurlok of Scorch Thrash]]. This player taps the Yurlok for mana before their turn starts (their opponent's end step). Obviously, the red and black mana become red mana, but how does this interaction play out for the green mana? I see three explanations, based on how the event is applied:

1. The event that which would cause the green mana to be lost, 500.4, NEVER occurs at all due to Omnath's ability, causing the Ozai replacement effect to never "see" the green mana. At the beginning of their turn, the player has 1 green and 2 red mana.
2. The event that which would cause the mana to be lost DOES occur and both the Omnath and Ozai efffects apply simultaneously. This interpretation implies 500.4 still happens, but it is simply ignored due to Omnath. The player in this interpretation gets the choose whether they will convert this green to red, due to Ozai, or if they will not lose the mana due to Omnath. At the beginning of their turn, the player will have either 3 red or 1 green and 2 red mana.

Which of these two explanations is correct with regards to the comprehensive rules?