settingSources: ["project"] should not traverse parent directories

Preflight Checklist

• [x] I have searched existing requests and this feature hasn't been requested yet
• [x] This is a single feature request (not multiple features)

Problem Statement

When using settingSources: ["project"] in the Agent SDK, skills and rules are inherited from parent directories up to the repository root. This is problematic in monorepos or when working with multiple isolated projects in subdirectories—settings leak across project boundaries unintentionally, making it hard to keep projects truly scoped.

Proposed Solution

Add a settingSources option (e.g., "project-only" or a flag like traverseParents: false) that loads settings only from the current .claude/ directory, with no parent traversal.

Alternative Solutions

Currently, users must either use settingSources: [] and pass everything programmatically, or accept parent inheritance and manage it carefully.

Priority

Critical - Blocking my work

Feature Category

CLI commands and flags

Use Case Example

Working in a monorepo with root/.claude/skills/ and root/agent/.claude/skills/. When running from agent/, I want only agent/.claude/skills/ loaded, not inherited skills from root/.

Additional Context

_No response_