diff --git a/packages/perennial-oracle/contracts/Oracle.sol b/packages/perennial-oracle/contracts/Oracle.sol
index f811522c9..654fd5914 100644
--- a/packages/perennial-oracle/contracts/Oracle.sol
+++ b/packages/perennial-oracle/contracts/Oracle.sol
@@ -25,7 +25,8 @@ contract Oracle is IOracle, Instance {
 
     /// @notice Updates the current oracle provider
     /// @param newProvider The new oracle provider
-    function update(IOracleProvider newProvider) external onlyOwner {
+    function update(IOracleProvider newProvider) external {
+        if (msg.sender != address(factory())) revert OracleNotFactoryError();
         _updateCurrent(newProvider);
         _updateLatest(newProvider.latest());
     }
diff --git a/packages/perennial-oracle/contracts/interfaces/IOracle.sol b/packages/perennial-oracle/contracts/interfaces/IOracle.sol
index 68af5fea7..1ce877b61 100644
--- a/packages/perennial-oracle/contracts/interfaces/IOracle.sol
+++ b/packages/perennial-oracle/contracts/interfaces/IOracle.sol
@@ -5,6 +5,7 @@ import "@equilibria/root/attribute/interfaces/IInstance.sol";
 import "@equilibria/perennial-v2/contracts/interfaces/IOracleProvider.sol";
 
 interface IOracle is IOracleProvider, IInstance {
+    error OracleNotFactoryError();
     error OracleOutOfSyncError();
     error OracleOutOfOrderCommitError();
 
diff --git a/packages/perennial-oracle/test/integration/oracle/OracleFactory.test.ts b/packages/perennial-oracle/test/integration/oracle/OracleFactory.test.ts
new file mode 100644
index 000000000..36e4b00a3
--- /dev/null
+++ b/packages/perennial-oracle/test/integration/oracle/OracleFactory.test.ts
@@ -0,0 +1,81 @@
+import { SignerWithAddress } from '@nomiclabs/hardhat-ethers/signers'
+import { expect } from 'chai'
+import { utils } from 'ethers'
+import HRE from 'hardhat'
+import { impersonateWithBalance } from '../../../../common/testutil/impersonate'
+import {
+  IERC20Metadata,
+  IERC20Metadata__factory,
+  Oracle__factory,
+  OracleFactory,
+  OracleFactory__factory,
+  PythFactory,
+  PythFactory__factory,
+  PythOracle__factory,
+} from '../../../types/generated'
+import { parse6decimal } from '../../../../common/testutil/types'
+
+const { ethers } = HRE
+
+const PYTH_ADDRESS = '0x4305FB66699C3B2702D4d05CF36551390A4c69C6'
+const PYTH_ETH_USD_PRICE_FEED = '0xff61491a931112ddf1bd8147cd1b641375f79f5825126d665480874634fd0ace'
+const DSU_ADDRESS = '0x605D26FBd5be761089281d5cec2Ce86eeA667109'
+const CHAINLINK_ETH_USD_FEED = '0x5f4eC3Df9cbd43714FE2740f5E3616155c5b8419'
+const DSU_HOLDER = '0x2d264EBDb6632A06A1726193D4d37FeF1E5dbDcd'
+
+describe('OracleFactory', () => {
+  let owner: SignerWithAddress
+  let pythOracleFactory: PythFactory
+  let oracleFactory: OracleFactory
+  let dsu: IERC20Metadata
+
+  beforeEach(async () => {
+    ;[owner] = await ethers.getSigners()
+
+    dsu = IERC20Metadata__factory.connect(DSU_ADDRESS, owner)
+
+    const oracleImpl = await new Oracle__factory(owner).deploy()
+    oracleFactory = await new OracleFactory__factory(owner).deploy(oracleImpl.address)
+    await oracleFactory.initialize(dsu.address)
+    await oracleFactory.updateMaxClaim(parse6decimal('10'))
+
+    const pythOracleImpl = await new PythOracle__factory(owner).deploy(PYTH_ADDRESS)
+    pythOracleFactory = await new PythFactory__factory(owner).deploy(
+      pythOracleImpl.address,
+      CHAINLINK_ETH_USD_FEED,
+      dsu.address,
+    )
+    await pythOracleFactory.initialize(oracleFactory.address)
+    await oracleFactory.register(pythOracleFactory.address)
+    await pythOracleFactory.authorize(oracleFactory.address)
+
+    await pythOracleFactory.create(PYTH_ETH_USD_PRICE_FEED)
+
+    await oracleFactory.create(PYTH_ETH_USD_PRICE_FEED, pythOracleFactory.address)
+
+    const dsuHolder = await impersonateWithBalance(DSU_HOLDER, utils.parseEther('10'))
+    await dsu.connect(dsuHolder).transfer(oracleFactory.address, utils.parseEther('100000'))
+  })
+
+  describe('#update', async () => {
+    it('can update the price id', async () => {
+      const pythOracleImpl2 = await new PythOracle__factory(owner).deploy(PYTH_ADDRESS)
+      const pythOracleFactory2 = await new PythFactory__factory(owner).deploy(
+        pythOracleImpl2.address,
+        CHAINLINK_ETH_USD_FEED,
+        dsu.address,
+      )
+      await pythOracleFactory2.initialize(oracleFactory.address)
+      await oracleFactory.register(pythOracleFactory2.address)
+
+      await pythOracleFactory2.connect(owner).authorize(oracleFactory.address)
+      await pythOracleFactory2.create(PYTH_ETH_USD_PRICE_FEED)
+      const newProvider = await pythOracleFactory2.oracles(PYTH_ETH_USD_PRICE_FEED)
+
+      const oracle = Oracle__factory.connect(await oracleFactory.oracles(PYTH_ETH_USD_PRICE_FEED), owner)
+      await expect(oracleFactory.update(PYTH_ETH_USD_PRICE_FEED, pythOracleFactory2.address))
+        .to.emit(oracle, 'OracleUpdated')
+        .withArgs(newProvider)
+    })
+  })
+})
diff --git a/packages/perennial-oracle/test/unit/oracle/Oracle.test.ts b/packages/perennial-oracle/test/unit/oracle/Oracle.test.ts
index b92abc7ce..a9bd83a17 100644
--- a/packages/perennial-oracle/test/unit/oracle/Oracle.test.ts
+++ b/packages/perennial-oracle/test/unit/oracle/Oracle.test.ts
@@ -115,7 +115,7 @@ describe('Oracle', () => {
 
     context('updates the oracle w/o sync', async () => {
       beforeEach(async () => {
-        await expect(oracle.connect(owner).update(underlying1.address))
+        await expect(oracle.connect(oracleFactorySigner).update(underlying1.address))
           .to.emit(oracle, 'OracleUpdated')
           .withArgs(underlying1.address)
       })
@@ -172,7 +172,7 @@ describe('Oracle', () => {
       it('reverts when oracle out of sync', async () => {
         const underlying2 = await smock.fake<IOracleProvider>('IOracleProvider')
 
-        await expect(oracle.connect(owner).update(underlying2.address)).to.revertedWithCustomError(
+        await expect(oracle.connect(oracleFactorySigner).update(underlying2.address)).to.revertedWithCustomError(
           oracle,
           'OracleOutOfSyncError',
         )
@@ -200,7 +200,7 @@ describe('Oracle', () => {
           1687230905,
         )
         await oracle.connect(caller).request(user.address)
-        await expect(oracle.connect(owner).update(underlying1.address))
+        await expect(oracle.connect(oracleFactorySigner).update(underlying1.address))
           .to.emit(oracle, 'OracleUpdated')
           .withArgs(underlying1.address)
       })
@@ -496,9 +496,10 @@ describe('Oracle', () => {
     })
 
     it('reverts when not the owner', async () => {
-      await expect(oracle.connect(user).update(underlying1.address))
-        .to.revertedWithCustomError(oracle, 'InstanceNotOwnerError')
-        .withArgs(user.address)
+      await expect(oracle.connect(user).update(underlying1.address)).to.revertedWithCustomError(
+        oracle,
+        'OracleNotFactoryError',
+      )
     })
   })