At first, the Oracle only seems to be on his side. She is a computer program that is just as dependant on humans for energy as the rest of the Machines, so keeping them hooked to the Matrix is in her best interest. However, a Matrix design that was satisfactory for all humans couldn't be found. As the Architect explains, it was the Oracle who coincidentally found a solution for the Matrix anomaly: by allowing those humans that rejected the illusion of the Matrix to escape, and by giving them the illusion that they could defeat the Machines, a temporary balance could be created. Providing the 'One' with this information was all part of the Machines' plan to keep both the free people and the ones connected to the Matrix in check. Later, she points Neo to The Keymaker, who will inevitably lead him to the Source, so he can reset the system.
However, being separate entities, most programs started to develop signs of individuality, together with sentiments and emotions. Agent Smith is a good example, as he shows signs of anger, exasperation and even loathing. The Oracle is no exception. She told people "what they were meant to hear", which was always what the Machines' intention for them was. But after five versions of the Matrix/Zion, she started to have other thoughts, feeling that a different system could be possible, without the need for repression. It is not her place to explain to Neo anything that he is not ready for, but she can lead him down the path that is intended for him. She cannot explain to him what she cannot herself understand, but she seems to understand that something must change, even though the outcome could be potentially disastrous. Subsequently, the Architect says that she "played a very dangerous game". The ultimate choice, and the choice about allowing Smith to assimilate her, are beyond her measure of understanding.