Gather all ingredients.

Cook peppers, onion, garlic, oil, and salt in a large saucepan over medium-high heat, stirring frequently, 5 minutes.

Pour in water; cook and stir until peppers are soft, about 20 minutes. Cool to room temperature.

Transfer mixture to a blender and purée until smooth. Pour in vinegar and sugar; blend until mixed.

Transfer to a container. Cover and store in the refrigerator.