Biological microswimmers navigate upstream of an external flow with trajectories ranging from linear to spiralling and oscillatory. Such a rheotactic response primarily stems from the hydrodynamic interactions triggered by the complex shapes of the microswimmers, such as flagellar chirality. We show here that a self-propelling droplet exhibits oscillatory rheotaxis in a microchannel, despite its simple spherical geometry. Such behaviour has been previously unobserved in artificial swimmers. Comparing our experiments to a purely hydrodynamic theory model, we demonstrate that the oscillatory rheotaxis of the droplet is primarily governed by both the shear flow characteristics and the interaction of the finite-sized microswimmer with all four microchannel walls. The dynamics can be controlled by varying the external flow strength, even leading to the rheotactic trapping of the oscillating droplet. Our results provide a realistic understanding of the behaviour of active particles navigating in confined microflows relevant in many biotechnology applications. © 2022, The Author(s).