Opus API Request Blocked in Project Root Directory

Bug Description
Opus 4.1 returns the following error on every request from inside Claude Code shell:

/init is analyzing your codebase…

⎿ API Error: Claude Code is unable to respond to this request, which appears to violate our Usage
Policy (https://www.anthropic.com/legal/aup). Please double press esc to edit your last message or
start a new session for Claude Code to assist with a different task.

Can shift to a new directory and run from there, it doesn't happen. But always happens from project root directory. Doesn't occur if switch to Sonnet but switching back to Opus, it does. Complete blocker for proceeding on this project. There is no obvious reason and the codebase is innoccuous as are the prompts resulting in the error.

Environment Info

• Platform: darwin
• Terminal: ghostty
• Version: 1.0.72
• Feedback ID: d49b8a52-81e3-41d1-ba9f-9f05c62e69c6

Errors

[
"API Error: Claude Code is unable to respond to this request, which appears to violate our Usage
    Policy (https://www.anthropic.com/legal/aup). Please double press esc to edit your last message or
     start a new session for Claude Code to assist with a different task."
]