Racism in Oblivion is child’s play. Morrowind had full on race based slavery.
There’s a quest where slavers/drug smugglers ask you to escort a Khajiit slave who has been forced to swallow a bunch of moon sugar. If you choose to complete the task, they’ll just kill her when she arrives to get the drugs.
There’s a couple quests where you can also return freed slaves back to their owners.
Funnily enough, even you play as a Dunmer lots of the Dunmer will still hate you because you have some kind of imperial accent.
Playing Telvanni can have you putting down slave rebellions.
The main antagonist of the game literally wants to create his own ethnostate.