I'm kind of confused as to why the professor would do a course on Middle Eastern politics, and assign a book on oil politics and the Arab-Israeli conflict. There are many better books to cover such a wide topic, in my view. But I'm not the professor, so who knows.

The book is good. You're right about a bias; it leans pro-Palestinian, and interprets the history more in that light. However, it does provide a good background and good primary documents. If you want more primary documents, besides checking out The Avalon Project that Yale Law School put together, you can also get The Israel-Arab Reader: A Documentary History of the Middle East Conflict, by Rubin and Laqueur, which contains a wealth of good documents, including speeches and other documents that are a bit harder to track down online if you don't know where to look.

If you want a history book that runs in the pro-Israel leaning direction a roughly equal amount, I'd probably recommend (as I usually do) Righteous Victims by Benny Morris. It doesn't do the whole "primary documents" thing, but it is full of good information nevertheless, and Morris is considered a leading historian on the conflict itself (and an authority on the 1948 Arab-Israeli war, having written a decisive military history in a book titled 1948, and a book and follow-up book on the refugee crisis titled Birth of the Palestinian Refugee Problem and Birth of the Palestinian Refugee Problem Revisited). It is, in my opinion, just as good as Smith's book, so hopefully it will provide you with even better background. I'm of the opinion also that if you read both Smith and Morris, you end up better off than 99% of the (often crazy) people who yell about the conflict all day, and then you can start following current events with a better appreciation of the history both sides see and how it feeds into today.