SureAI

I have a lot of performance issues with the game, but I do have a very decient computer that runs all my games perfectley fine.

Do the performance issues have to do with gamestryo or my pc?

Hi.
Gamebro/Oblivion engine always caused problems.
Lot of threads on forum about performance issues, do a search on "performance", you might get some tips.
You do not give pc spec, so......
mine is

pentium black box duo (4 cores unlocked), 4gb ram, 2 x 9800gt sli mode ( = 2gb video ram), ssd harddrive for win 7 64bit os.
I am happy to see 30 fps with settings maxed. Freezes/slows to under 15 in some areas but only for a second.
Hope this gives you an idea and do check other threads.

There are some good INI file tweaks you can make, listed at http://www.tweakguides.com/Oblivion_4.html, also on the Oblivion Wiki http://www.uesp.net/wiki/Oblivion:Ini_Settings

Presumably you have set your Nehrim Launcher settings to use Multiple Cores and Multiple Threading ?
Also turn your 2 Nehrim launcher sliders all the way to maximum if you have at least 4Gb RAM.
Many sites say that this will cause crashing problems, and they are kind of right, it will crash more than before because Oblivion is a 32bit program, and after afew hours of running it meets the 3.2Gb limit for 32bit apps and crashes, but it really does help performance.

Also, I have an ATI Radeon card, so I used ATITray tools to create a profile for Nehrim whereas when it runs it turns on Automatic Overclocking for the GFX card, and turns it off again when it exits.
If you are an NVidia person, im sure there is an equivalent tool to do the same.

NB - Obviously overclocking can damage your hardware if you are unlucky.