[BUG] Claude Code not responding in IDE (no output / hangs indefinitely)

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?

Claude Code stops responding when used inside my IDE — it either hangs with no output or never returns a response after a prompt is submitted.

IDE: [Cursor] — version: [3.13.10]
Claude Code version: 2.1.220
OS: [macOS]
Node: v24.18.0

Steps to reproduce

Open Claude Code in repo
Enter prompt: "any prompt"

Result:

<!-- Failed to upload "image.png" -->

What Should Happen?

The response from agent should come

Error Messages/Logs

API error · Retrying in 0s · attempt 2/10

Steps to Reproduce

Claude Code stops responding when used inside my IDE — it either hangs with no output or never returns a response after a prompt is submitted.

IDE: [Cursor] — version: [3.13.10]
Claude Code version: 2.1.220
OS: [macOS]
Node: v24.18.0

Steps to reproduce

Open Claude Code in repo
Enter prompt: "any prompt"

Result:

<!-- Uploading "image.png"... -->

✻ 503 Anthropic pre-upstream queue is saturated. Please retry shortly. · Retrying in 2s · attempt 5/10

I can't update claude code either, the /update command fails with a same error

Claude Model

Not sure / Multiple models

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.220

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_