diff --git a/package.json b/package.json
index 08dcb89..19a4775 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@tangle-network/agent-runtime",
-  "version": "0.12.0",
+  "version": "0.12.1",
   "description": "Reusable runtime lifecycle for domain-specific agents.",
   "homepage": "https://github.com/tangle-network/agent-runtime#readme",
   "repository": {
diff --git a/src/backends.ts b/src/backends.ts
index c1a0d0d..160fc0e 100644
--- a/src/backends.ts
+++ b/src/backends.ts
@@ -70,6 +70,59 @@ export function createSandboxPromptBackend<
 }
 
 /** @stable */
+/**
+ * Retry policy for transient transport errors (rate limits, upstream
+ * timeouts). Defaults to 5 attempts with exponential backoff starting at
+ * 1s, ±25% jitter, capped at 30s. Set `maxAttempts: 1` to disable retries.
+ *
+ * Retried status codes:
+ *   - 408 Request Timeout
+ *   - 425 Too Early
+ *   - 429 Too Many Requests
+ *   - 500 / 502 / 503 / 504 — upstream transient failures
+ *
+ * Hard failures (401, 403, 4xx other than the above) propagate immediately.
+ */
+export interface BackendRetryPolicy {
+  /** Total attempts including the first try. Default 5. */
+  maxAttempts?: number
+  /** Initial backoff in ms before the second attempt. Default 1000. */
+  initialBackoffMs?: number
+  /** Hard ceiling on backoff in ms. Default 30000. */
+  maxBackoffMs?: number
+  /** Jitter fraction in [0, 1]. Default 0.25 (±25%). */
+  jitter?: number
+  /** Status codes that trigger a retry. Default: 408, 425, 429, 500, 502, 503, 504. */
+  retryStatuses?: ReadonlyArray<number>
+}
+
+const DEFAULT_RETRY_STATUSES = [408, 425, 429, 500, 502, 503, 504] as const
+
+function pickRetryDelayMs(attempt: number, policy: Required<BackendRetryPolicy>): number {
+  const exp = policy.initialBackoffMs * 2 ** (attempt - 1)
+  const capped = Math.min(exp, policy.maxBackoffMs)
+  const jitter = capped * policy.jitter * (Math.random() * 2 - 1)
+  return Math.max(0, Math.round(capped + jitter))
+}
+
+function sleep(ms: number, signal?: AbortSignal): Promise<void> {
+  return new Promise((resolve, reject) => {
+    if (signal?.aborted) {
+      reject(signal.reason ?? new Error('aborted'))
+      return
+    }
+    const t = setTimeout(() => {
+      signal?.removeEventListener('abort', onAbort)
+      resolve()
+    }, ms)
+    const onAbort = () => {
+      clearTimeout(t)
+      reject(signal?.reason ?? new Error('aborted'))
+    }
+    signal?.addEventListener('abort', onAbort, { once: true })
+  })
+}
+
 export function createOpenAICompatibleBackend<
   TInput extends AgentBackendInput = AgentBackendInput,
 >(options: {
@@ -78,33 +131,57 @@ export function createOpenAICompatibleBackend<
   model: string
   kind?: string
   fetchImpl?: typeof fetch
+  retry?: BackendRetryPolicy
 }): AgentExecutionBackend<TInput> {
   const fetcher = options.fetchImpl ?? fetch
   const kind = options.kind ?? 'tcloud'
+  const retryPolicy: Required<BackendRetryPolicy> = {
+    maxAttempts: options.retry?.maxAttempts ?? 5,
+    initialBackoffMs: options.retry?.initialBackoffMs ?? 1000,
+    maxBackoffMs: options.retry?.maxBackoffMs ?? 30000,
+    jitter: options.retry?.jitter ?? 0.25,
+    retryStatuses: options.retry?.retryStatuses ?? DEFAULT_RETRY_STATUSES,
+  }
   return {
     kind,
     start(_input, context) {
       return newRuntimeSession(kind, context.requestedSessionId)
     },
     async *stream(input, context) {
-      const response = await fetcher(`${options.baseUrl.replace(/\/$/, '')}/chat/completions`, {
-        method: 'POST',
-        headers: {
-          Authorization: `Bearer ${options.apiKey}`,
-          'Content-Type': 'application/json',
-        },
-        body: JSON.stringify({
-          model: options.model,
-          stream: true,
-          messages: input.messages ?? [
-            { role: 'user', content: input.message ?? context.task.intent },
-          ],
-        }),
-        signal: context.signal,
-      })
-      if (!response.ok) {
-        throw new BackendTransportError(kind, `chat backend returned ${response.status}`, {
-          status: response.status,
+      let response: Response | undefined
+      let lastStatus = 0
+      for (let attempt = 1; attempt <= retryPolicy.maxAttempts; attempt++) {
+        response = await fetcher(`${options.baseUrl.replace(/\/$/, '')}/chat/completions`, {
+          method: 'POST',
+          headers: {
+            Authorization: `Bearer ${options.apiKey}`,
+            'Content-Type': 'application/json',
+          },
+          body: JSON.stringify({
+            model: options.model,
+            stream: true,
+            messages: input.messages ?? [
+              { role: 'user', content: input.message ?? context.task.intent },
+            ],
+          }),
+          signal: context.signal,
+        })
+        if (response.ok) break
+        lastStatus = response.status
+        if (!retryPolicy.retryStatuses.includes(response.status)) break
+        if (attempt === retryPolicy.maxAttempts) break
+        // Drain the failed body so the connection can be reused.
+        try {
+          await response.body?.cancel()
+        } catch {
+          // Best-effort — some runtimes don't expose cancel.
+        }
+        const delayMs = pickRetryDelayMs(attempt, retryPolicy)
+        await sleep(delayMs, context.signal)
+      }
+      if (!response || !response.ok) {
+        throw new BackendTransportError(kind, `chat backend returned ${lastStatus || 'unknown'}`, {
+          status: lastStatus || 0,
         })
       }
       yield* streamResponseEvents(response, context)