feat(otel): configure W3C trace propagation for distributed tracing

cmd/root/otel.go

@@ -10,6 +10,7 @@ import (
 
 	"go.opentelemetry.io/otel"
 	"go.opentelemetry.io/otel/exporters/otlp/otlptrace/otlptracehttp"
+	"go.opentelemetry.io/otel/propagation"
 	"go.opentelemetry.io/otel/sdk/resource"
 	"go.opentelemetry.io/otel/sdk/trace"
 	semconv "go.opentelemetry.io/otel/semconv/v1.40.0"
@@ -65,6 +66,14 @@ func initOTelSDK(ctx context.Context) (err error) {
 	tp := trace.NewTracerProvider(tracerProviderOpts...)
 	otel.SetTracerProvider(tp)
 
+	// Propagator must be set so otelhttp injects W3C traceparent on
+	// outbound requests and extracts it from incoming ones. Without this
+	// the SDK records spans locally but they never chain across services.
+	otel.SetTextMapPropagator(propagation.NewCompositeTextMapPropagator(
+		propagation.TraceContext{},
+		propagation.Baggage{},
+	))
+
 	go func() {
 		<-ctx.Done()
 		shutdownCtx, cancel := context.WithTimeout(context.Background(), 5*time.Second)

go.mod

@@ -221,7 +221,7 @@ require (
 	github.com/yuin/goldmark-emoji v1.0.5 // indirect
 	go.etcd.io/bbolt v1.4.0 // indirect
 	go.opentelemetry.io/auto/sdk v1.2.1 // indirect
-	go.opentelemetry.io/contrib/instrumentation/net/http/otelhttp v0.63.0 // indirect
+	go.opentelemetry.io/contrib/instrumentation/net/http/otelhttp v0.63.0
 	go.opentelemetry.io/otel/exporters/otlp/otlpmetric/otlpmetricgrpc v1.40.0 // indirect
 	go.opentelemetry.io/otel/exporters/otlp/otlptrace v1.43.0 // indirect
 	go.opentelemetry.io/otel/exporters/otlp/otlptrace/otlptracegrpc v1.40.0 // indirect

pkg/httpclient/client.go

@@ -6,8 +6,11 @@ import (
 	"maps"
 	"net/http"
 	"net/url"
+	"os"
 	"runtime"
 
+	"go.opentelemetry.io/contrib/instrumentation/net/http/otelhttp"
+
 	"github.com/docker/docker-agent/pkg/remote"
 	"github.com/docker/docker-agent/pkg/version"
 )
@@ -97,18 +100,38 @@ func WithQuery(query url.Values) Opt {
 	}
 }
 
-// newTransport returns an HTTP transport with automatic gzip compression disabled and using Docker Desktop proxy if available.
+// newTransport returns an HTTP transport with automatic gzip compression
+// disabled and using Docker Desktop proxy if available.
+//
+// When OpenTelemetry is enabled (i.e. OTEL_EXPORTER_OTLP_ENDPOINT is set,
+// matching the gating in initOTelSDK), the transport is wrapped with
+// otelhttp so each outbound request emits a CLIENT span and the W3C
+// traceparent header is injected. When OTel is disabled, the bare
+// transport is returned so we don't allocate per-request spans nor send
+// a traceparent header to upstream LLM providers.
 func newTransport(ctx context.Context) http.RoundTripper {
 	// Get the base transport with Desktop proxy support from remote package
 	rt := remote.NewTransport(ctx)
 
 	// If it's an http.Transport, disable compression for SSE streaming compatibility
 	if transport, ok := rt.(*http.Transport); ok {
 		transport.DisableCompression = true
-		return transport
+		rt = transport
 	}
 
-	return rt
+	return WrapWithOTel(rt)
+}
+
+// WrapWithOTel returns rt wrapped with otelhttp when OpenTelemetry is
+// enabled (OTEL_EXPORTER_OTLP_ENDPOINT set, matching the gating in
+// cmd/root/otel.go), or rt unchanged otherwise. Exposed so callers that
+// build their own transports outside of NewHTTPClient can opt into the
+// same env-gated instrumentation without duplicating the gating logic.
+func WrapWithOTel(rt http.RoundTripper) http.RoundTripper {
+	if os.Getenv("OTEL_EXPORTER_OTLP_ENDPOINT") == "" {
+		return rt
+	}
+	return otelhttp.NewTransport(rt)
 }
 
 type userAgentTransport struct {