Romans 4:11

‘And he received the sign of circumcision, a seal of the righteousness of the faith which he had while he was in uncircumcision, that he might be the father of all those who believe, though they be in uncircumcision, that righteousness might be reckoned to them,'

What then was the purpose of circumcision? It was a ‘sign' of the covenant between God and Abraham (Genesis 17:11). It was thus a sign that he was already reckoned as in the right, and it was a seal of the righteousness which had been reckoned to him while he was still in uncircumcision. And this was so that he might be the father of all who believe and are therefore reckoned by God as in the right, even though they be in uncircumcision. The argument here is against the Jewish claim that without circumcision it was not possible to be a son of Abraham. Against their view he is now arguing that Abraham is the father of all believers because God's promise of future blessing for the whole world was to come through him and his descendants (Genesis 12:3). This in fact went contrary to the Jewish belief that no Gentile could call God their father, even when they became proselytes. They no doubt took this position because they argued that such Gentiles were not literal descendants of Abraham. But this only served to demonstrate the folly of their thinking because an examination of Scripture itself makes quite clear that comparatively few Jews are actually literal descendants of Abraham as we have seen above.

But Paul himself had no problem with seeing Abraham as the father of all believers, because in his eyes all believers were already a part of Israel. It was his opponents who argued otherwise, and whom he is trying to convince here. It should be noted that the fact that circumcision was the  seal  of the righteousness that Abraham had through faith clearly demonstrated that circumcision was not the grounds of it.