In a large sauce pan over medium-high heat, combine oil, peppers, garlic, onion, and salt; cook for 5 minutes, stirring frequently.
Pour in water, and cook for 20 minutes, or until the ingredients are soft. Stir frequently. Remove from heat, and allow mixture to cool to room temperature.
Transfer the mixture to a blender, and puree until smooth. Pour in vinegar and sugar; blend until mixed. Keep refrigerated .
