Following are the steps that I followed to change the hostname of one OCI Compute Instance for one of my clients. Note that the operating system for this instance is Oracle Linux:
1. Use the hostnamectl utility to change the hostname
hostnamectl set-hostname new_hostname
2. Update the /etc/hosts file with the new name
[root@infodqmdm001 ~]# cat /etc/hosts
127.0.0.1 localhost localhost.localdomain localhost4 localhost4.localdomain4
::1 localhost localhost.localdomain localhost6 localhost6.localdomain6
172.17.15.112 new_hostname.app.oraclevcn.com new_hostname
3- Update the /etc/oci-hostname.conf, set the PRESERVE_HOSTINFO=2 so as to preserve the new name across reboots
vi /etc/oci-hostname.conf
PRESERVE_HOSTINFO=2
4- If necessary, edit the FQDN from OCI console GUI.
5- Check the file: cat /etc/sysconfig/network
If the HOSTNAME is set, change it to the new name
6- Test using: hostnamectl
7- Reboot the machine and ensure the new hostname came after rebbot