fix: use dummy key for loopback otherwise fail fast.

README.md

@@ -62,12 +62,11 @@ git clone https://github.com/ostefani/wepaircode
 cd wepaircode
 
 # 2. Create virtual environment
-python3 -m venv .venv
+python3.14 -m venv .venv
 source .venv/bin/activate
 
 # 3. Install dependencies
-pip install -r requirements.txt
-python3.14 -m pip install -r requirements.txt
+python -m pip install -r requirements.txt
 python -m pytest tests/ -q
 
 

agent/embeddings/factory.py

@@ -1,5 +1,7 @@
 import importlib
 from collections.abc import Callable
+from ipaddress import ip_address
+from urllib.parse import urlparse
 
 from ..config import Config
 from .adapters import (
@@ -16,16 +18,37 @@
     "openai": "agent.embeddings.providers.openai.OpenAIEmbeddingAdapter",
 }
 
+LOCAL_DUMMY_API_KEY = "dummy"
+
+
+def _is_local_api_base(api_base: str) -> bool:
+    try:
+        host = urlparse(api_base).hostname or ""
+    except ValueError:
+        return False
+    host = host.lower().rstrip(".")
+    if host == "localhost":
+        return True
+    try:
+        return ip_address(host).is_loopback
+    except ValueError:
+        return False
+
+
 def build_embedding_provider_config(config: Config) -> EmbeddingProviderConfig:
     options = {
         key: value
         for key, value in dict(config.embedding_provider_options).items()
         if key not in RESERVED_EMBEDDING_PROVIDER_OPTION_KEYS
     }
+
+    api_key = config.embedding_api_key or config.api_key
+    if not api_key and _is_local_api_base(config.embedding_api_base):
+        api_key = LOCAL_DUMMY_API_KEY
     return EmbeddingProviderConfig(
         provider=config.embedding_provider,
         api_base=config.embedding_api_base,
-        api_key=config.embedding_api_key or config.api_key,
+        api_key=api_key,
         model=config.embedding_model,
         options=options,
     )

tests/test_embedding_adapters.py

@@ -296,6 +296,42 @@ def test_embedding_factory_falls_back_to_primary_api_key(monkeypatch) -> None:
     assert instance.calls[0]["input"] == ["hello"]
 
 
+def test_embedding_factory_defaults_to_dummy_api_key_for_local_servers(
+    monkeypatch,
+) -> None:
+    AsyncOpenAI, _, _ = _install_fake_openai(monkeypatch)
+
+    config = Config(
+        embedding_provider="openai",
+        api_key="",
+        embedding_api_key="",
+        embedding_api_base="http://localhost:8082/v1",
+        embedding_model="embed-model",
+    )
+
+    adapter = asyncio.run(create_embedding_adapter(config))
+    asyncio.run(adapter.embed(["hello"]))
+
+    instance = AsyncOpenAI.instances[0]
+    assert instance.kwargs["api_key"] == embeddings_factory.LOCAL_DUMMY_API_KEY
+    assert instance.calls[0]["input"] == ["hello"]
+    asyncio.run(adapter.aclose())
+
+
+def test_embedding_factory_preserves_empty_api_key_for_remote_servers() -> None:
+    config = Config(
+        embedding_provider="openai",
+        api_key="",
+        embedding_api_key="",
+        embedding_api_base="https://api.openai.com/v1",
+        embedding_model="embed-model",
+    )
+
+    provider_config = embeddings_factory.build_embedding_provider_config(config)
+
+    assert provider_config.api_key == ""
+
+
 def test_embedding_factory_probes_when_configured(monkeypatch) -> None:
     AsyncOpenAI, _, _ = _install_fake_openai(monkeypatch)