Installing a graphics card is probably a good idea as it will perform a lot better than integrated graphics. It's worth thinking about the resolution you want to play the game at (i.e. your monitor's native resolution). Then look at some sites like hardocp, tomshardware or searching google for some benchmarks of graphics cards running oblivion. is a site that offers some basic advice on picking a graphics card and installing a new graphics card if that's any help.

Be aware that as a pre-built system the power supply of your dell is unlikely to be able to provide much more power than is necessary for your current components. I am not sure if the PSU will be labelled with its rating (in watts) but if you can check this and compare to total power usage in reviews of graphics cards.

Hope that helps!