Over medium heat, in a medium saucepan heat the vegetable oil.
Add the chopped onion and cook until translucent.
Stir in the minced garlic, chili powder, cumin, paprika, and cayenne pepper. Cook for about 1-2 minutes until fragrant.
Pour in the crushed tomatoes and water. Stir well to combine.
Add the sugar, salt, and pepper. Let the mixture reach a mild simmer.
Lower the heat to a gentle flame and allow the sauce to simmer for approximately 15 to 20 minutes, stirring occasionally.
Using a blender or immersion blender, carefully blend the sauce until smooth and well-incorporated.
Taste and adjust the seasonings according to your preference.
Take it off the heat and allow the sauce to cool slightly before serving.