This isn't very obvious, and I certainly wouldn't expect it to be obvious to those who haven't traveled internationally as much.

To the point, I'm neither European nor white and was almost always spoken to in Spanish when in Spain. That may be because of the lower level of English proficiency in Spain, however.

I imagine it would be latter, but I am not sure, hence my question. I have little knowledge about Iceland. I know for example in Quebec outside of Montreal, everyone assumes you speak French, regardless of your ethnicity.

I think most Icelanders, including myself, would start off conversing in English as a matter of courtesy; it would be rude to assume that a person of an ethnic minority isn't Icelandic based on their looks. A lot of times they are indeed Icelanders of ethnic minorities, and you avoid a situation embarrassing for both parties, and perhaps make them feel more welcome in the country they were born in.

When I went to Iceland, I was expecting to see close to zero immigrants and their descendants among the Icelandic population. I was surprised to see quite a few people of African and Asian descent working in Icelandic stores and speaking fluent Icelandic with the customers.

I found that the children in Iceland know English surprisingly well. My children were playing with an 8-year-old Icelandic girl who spoke nearly flawless English. I was impressed.