oci_core_instance shape update is not working since v6.37.0

[szadam0829]

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Issue

Updating the shape attributes of an instance (ocpu count, memory, baseline_ocpu_utilization) is not working since version 6.37.0. It looks like the work requests are not reaching the instance, we can't see them on the UI. I tried with version 7.0.2 and 7.16.0 as well, same result. Creating the instances works fine, it doesn't matter which version was used to deploy them, changing the shape attributes will result in error.
With version 6.36.0 everything works fine, the attributes are updated, and the successful work requests are shown on the UI.

Terraform Version and Provider Version

Terraform v1.13.1
on darwin_arm64

• provider registry.terraform.io/hashicorp/local v2.5.3
• provider registry.terraform.io/hashicorp/vault v4.8.0
• provider registry.terraform.io/oracle/oci v6.37.0

Affected Resource(s)

oci_core_instance

Expected Behavior

The shape attributes updated to the values set in the config files.

Actual Behavior

Terraform will perform the following actions:

  # module.tf_shape_update_test[0].oci_core_instance.VM will be updated in-place
  ~ resource "oci_core_instance" "VM" {
        id                          = "<ocid>"
        # (26 unchanged attributes hidden)

      ~ shape_config {
          + baseline_ocpu_utilization     = "BASELINE_1_2"
            # (12 unchanged attributes hidden)
        }

        # (7 unchanged blocks hidden)
    }

  # module.tf_shape_update_test[1].oci_core_instance.VM will be updated in-place
  ~ resource "oci_core_instance" "VM" {
        id                          = "<ocid>"
        # (26 unchanged attributes hidden)

      ~ shape_config {
          + baseline_ocpu_utilization     = "BASELINE_1_2"
            # (12 unchanged attributes hidden)
        }

        # (7 unchanged blocks hidden)
    }

Plan: 0 to add, 2 to change, 0 to destroy.

Do you want to perform these actions?
  Terraform will perform the actions described above.
  Only 'yes' will be accepted to approve.

  Enter a value: yes

After 2 minutes, the following error appears:

│ Error: 500-InternalError, An internal error occurred.
│ Suggestion: The service for this resource encountered an error. Please contact support for help with service: Core Instance
│ Documentation: https://registry.terraform.io/providers/oracle/oci/latest/docs/resources/core_instance 
│ API Reference: https://docs.oracle.com/iaas/api/#/en/iaas/20160918/Instance/UpdateInstance 
│ Request Target: PUT https://iaas.eu-frankfurt-1.oraclecloud.com/20160918/instances/<instance ocid>
│ Provider version: 6.37.0, released on 2025-04-30. This provider is 17 Update(s) behind to current. 
│ Service: Core Instance 
│ Operation Name: UpdateInstance 
│ OPC request ID: <request id>
│ 
│ 
│   with module.tf_shape_update_test[0].oci_core_instance.VM,
│   on ../modules/vm.tf line 26, in resource "oci_core_instance" "VM":
│   26: resource "oci_core_instance" "VM" {

Error: 500-InternalError, An internal error occurred.
│ Suggestion: The service for this resource encountered an error. Please contact support for help with service: Core Instance
│ Documentation: https://registry.terraform.io/providers/oracle/oci/latest/docs/resources/core_instance 
│ API Reference: https://docs.oracle.com/iaas/api/#/en/iaas/20160918/Instance/UpdateInstance 
│ Request Target: PUT https://iaas.eu-frankfurt-1.oraclecloud.com/20160918/instances/<instance ocid>
│ Provider version: 6.37.0, released on 2025-04-30. This provider is 17 Update(s) behind to current. 
│ Service: Core Instance 
│ Operation Name: UpdateInstance 
│ OPC request ID: <request id>
│ 
│ 
│   with module.tf_shape_update_test[1].oci_core_instance.VM,
│   on ../modules/vm.tf line 26, in resource "oci_core_instance" "VM":
│   26: resource "oci_core_instance" "VM" {
│ 

Steps to Reproduce

1. Change a shape attribute of a deployed instance (e.g: ocpu, memory, baseline_ocpu_utilization)
2. terraform apply

[szadam0829]

I did some testing, and found the following:
The first shape update on a newly deployed instance is working, after that we get the error.
For the first update the debug log seems normal:

2025-09-02T14:15:19.882+0200 [INFO]  Starting apply for module.shape-test[0].oci_core_instance.VM
2025-09-02T14:15:19.883+0200 [DEBUG] module.shape-test[0].oci_core_instance.VM: applying the planned Update change
2025-09-02T14:15:21.395+0200 [DEBUG] provider.terraform-provider-oci_v7.16.0: 2025/09/02 14:15:21 [DEBUG] Waiting for state to become: [SUCCEEDED FAILED CANCELED]
2025-09-02T14:15:21.489+0200 [DEBUG] provider.terraform-provider-oci_v7.16.0: INFO 2025/09/02 14:15:21.488962 Time elapsed for retry: 0s;  Expected retry duration: 0s 
2025-09-02T14:15:22.899+0200 [DEBUG] provider.terraform-provider-oci_v7.16.0: INFO 2025/09/02 14:15:22.899206 Time elapsed for retry: 2s;  Expected retry duration: 0s

After that, anytime I try to change any shape related attribute, the log shows lines like this:

2025-09-02T14:18:32.728+0200 [INFO]  Starting apply for module.shape-test[0].oci_core_instance.VM
2025-09-02T14:18:32.729+0200 [DEBUG] module.shape-test[0].oci_core_instance.VM: applying the planned Update change
2025-09-02T14:18:33.246+0200 [DEBUG] provider.terraform-provider-oci_v7.16.0: DEBUG 2025/09/02 14:18:33.246724 EC.ShouldRetryOperation, no EC or in the past, returning false: endOfWindowTime = <nil>, now = 2025-09-02 14:18:33.246656 +0200 CEST m=+0.999717959
2025-09-02T14:18:33.247+0200 [DEBUG] provider.terraform-provider-oci_v7.16.0: DEBUG 2025/09/02 14:18:33.246835 EC.ShouldRetryOperation, no EC or in the past, returning false: endOfWindowTime = <nil>, now = 2025-09-02 14:18:33.246825 +0200 CEST m=+0.999887417

I couldn't find anything else different in the logs