[BUG] Repeated API errors, stream idle timeouts, and excessive retry loops causing wasted credits and failed sessions

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

During a single working session, Claude Code repeatedly encountered stream idle timeout / API errors mid-response, forcing session restarts. Each restart consumed credits without completing the task. The agent also exhibited a pattern of excessive multi-step research before answering straightforward questions, further burning credits and time before ultimately
failing.

Actual behaviour:

• Stream idle timeout / API errors occurring mid-session, multiple times
• Agent retried silently, consuming credits, then failed anyway
• User forced to restart session and re-establish context repeatedly
• Substantive work lost on each failure

Impact:

• Wasted subscription credits (multiple failed sessions)
• Lost time re-establishing context across restarts
• No visibility into retry behaviour or credit consumption during failures, even with -debug
• excessive development time

Platform: Linux (Manjaro), Claude Code CLI
Model: claude-sonnet-4-6
Date: 2026-05-09

What Should Happen?

Expected behaviour:

• Stable API connection through a complete response cycle
• No silent retry loops burning credits before surfacing an error to the user
• Graceful failure with clear error message on first timeout, not repeated invisible retries

Error Messages/Logs

Steps to Reproduce

Steps to reproduce:

1. Open a Claude Code session on a moderately complex codebase (SQLMesh project, PostgreSQL)
2. Ask a question requiring 2–3 file reads and a direct recommendation
3. Observe: agent reads multiple files, spawns tool calls, then hits API/stream error before responding
4. Restart session, repeat — same failure pattern recurs

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.136

Platform

Anthropic API

Operating System

Other Linux

Terminal/Shell

Xterm

Additional Information

I note there are many many similar issues already logged, but it's not practical to inspect all of them for a match to my OS, UI, version, etc, especially given that 2.1.136 was released only yesterday (8 May 2026)