You have to keep a mortar and pestle on you at all times if you want to make potions. I use a retort mostly once I get it because it seems to do exactly what I need. Selling potions early in the game is a great way to get some gold because you can find the ingredients for free just by looking around. I never had a potion fail in Oblivion. Just select two ingredients, or more if possible, and create a potion of your choice...it's not difficult.

Then you can apply a poison to your weapon to help you fight too.
:obliviongate: