There are 2 reasons for this: the memory on these VMs is small (668MB) & DNF is badly written and uses 100s of MBs. Secondly Oracle Linux includes a lot of repos.

1. install microdnf by wgetting it (as dnf is failing)

wget https://yum.oracle.com/repo/OracleLinux/OL8/baseos/latest/x86_64/getPackage/libpeas-1.22.0-6.el8.x86_64.rpm

wget https://yum.oracle.com/repo/OracleLinux/OL8/baseos/latest/x86_64/getPackage/microdnf-3.4.0-4.el8.x86_64.rpm

rpm -ivh *.rpm

2. Upgrade base repos

microdnf update –disablerepo=* –enablerepo=ol8_baseos_latest –enablerepo=ol8_appstream