Genesis 17:18-26 NIV
18 And Abraham said to God, “If only Ishmael might live under your blessing!” 19 Then God said, “Yes, but your wife Sarah will bear you a son, and you will call him Isaac. I will establish my covenant with him as an everlasting covenant for his descendants after him. 20 And as for Ishmael, I have heard you: I will surely bless him; I will make him fruitful and will greatly increase his numbers. He will be the father of twelve rulers, and I will make him into a great nation. 21 But my covenant I will establish with Isaac, whom Sarah will bear to you by this time next year.” 22 When he had finished speaking with Abraham, God went up from him. 23 On that very day Abraham took his son Ishmael and all those born in his household or bought with his money, every male in his household, and circumcised them, as God told him. 24 Abraham was ninety-nine years old when he was circumcised, 25 and his son Ishmael was thirteen; 26 Abraham and his son Ishmael were both circumcised on that very day.
Verse 18
וַיֹּ֥אמֶר אַבְרָהָ֖ם אֶל־הָֽאֱלֹהִ֑ים ל֥וּ יִשְׁמָעֵ֖אל יִחְיֶ֥ה לְפָנֶֽיךָ׃
So Abraham said to God, “If only Ishmael could live before you”(BDB)
In this passage Abraham pleads with God that his son Ishmael might live before him ‘have life and an awareness of Gods presence in the way Abraham enjoyed relationship with God’ God responds that his covenant will be with Isaac and not Ishmael. Clearly there are two covenants at play in the passage. Both Ishmael and Isaac were circumcised and were therefore accepted and blessed by God with everything that was part of old covenant. What God was saying to Abraham was that Isaac and not Ishmael would receive new covenant the circumcision of the heart which will give awareness of Gods presence and relationship with God for Isaac.
Paul explains in Romans 4 that Abraham received circumcision of the heart through faith and this was received on a system of credit.
Romans 4:3 NIV
What does Scripture say? “Abraham believed God, and it was credited to him as righteousness.”
Romans 4:9-11 NIV
9 Is this blessedness only for the circumcised, or also for the uncircumcised? We have been saying that Abraham's faith was credited to him as righteousness. 10 Under what circumstances was it credited? Was it after he was circumcised, or before? It was not after, but before! 11 And he received circumcision as a sign, a seal of the righteousness that he had by faith while he was still uncircumcised. So then, he is the father of all who believe but have not been circumcised, in order that righteousness might be credited to them.
God had a system of credit in the OT period where He sovereignly would elect persons he chose to receive salvation and imputed righteousness with the circumcision of the heart. This was on credit because Christ's blood had not yet been shed.
Hebrews 9:25 passage says the blood shed at Calvary was shed once for all time in the fullness of time. Whilst the blood of Christ could not make payment for sin until after it was shed, Paul explains in Romans 9 to 11 that God is sovereign and saves or elects whom He wills. Paul points out in Romans 10:9 that the remnant of Jews who were the 7000 that had not bowed their knee to Baal. He shows that some of his countrymen received salvation through faith in the same way Abraham did and the same way we do today.
John 1:12-13 NIV
12 Yet to all who did receive him, to those who believed in his name, he gave the right to become children of God--- 13 children born not of natural descent, nor of human decision or a husband's will, but born of God.
The sovereign election of God is what saves people today when they believe in God and confess him as Lord or their God.
It is an error to say that Jews only had the law and the Old Covenant. Law would never be given without Grace. The two have always worked together. The tabernacle was a copy of a heavenly tabernacle that already existed, and scripture says there was a high priesthood through Melchizedek. There was no power in the law to save any Jew. The law was given as a schoolmaster to faith.
When a Jew was doing an animal sacrifice the gospel message was in the sacrifice that sin was terrible and repentance was called for. God would look at their heart attitude as he does with the New Testament church today and sovereignly chooses or elect some for circumcision of the heart or born again with the spirit coming alive as it does for us today. The righteous Jew who had received a righteousness that comes only through faith when he died went to paradise a place of waiting. When Jesus had shed his blood and paid for their sin he led captivity captive (Ephesians 4:11) and brought all the righteous dead Jews to heaven with him.
Deuteronomy 30:6 NIV
The Lord your God will circumcise your hearts and the hearts of your descendants, so that you may love him with all your heart and with all your soul, and live.
Jesus said to the Jews in John 10:14 “There are other sheep I have who are not of this pasture (Gentiles), them also I must bring and the two pastures will become one.” This is a picture of the chosen elect or the church through time in the same that Paul says in Romans 11 that the New Testament believers are grafted into the promises given to the Jews.
Romans 11:17-21 NIV
17 If some of the branches have been broken off, and you, though a wild olive shoot, have been grafted in among the others and now share in the nourishing sap from the olive root, 18 do not consider yourself to be superior to those other branches. If you do, consider this: You do not support the root, but the root supports you. 19 You will say then, “Branches were broken off so that I could be grafted in.” 20 Granted. But they were broken off because of unbelief, and you stand by faith. Do not be arrogant, but tremble. 21 For if God did not spare the natural branches, he will not spare you either.
This is the faith tree, we receive new covenant salvation by being grafted into the promises made by God to the Jews. How can we think all they had was the Law with none having what we have today in Christ?