Heat oil in a medium saucepan over medium-high heat. Add onion and garlic; cook 2 minutes or until onion is tender. Add 3/4 cup water and the remaining ingredients. Bring to a boil; reduce heat and simmer until reduced to 1 1/2 cups (about 12 minutes).
Place half of chili sauce mixture in a blender. Remove center piece of blender lid (to allow steam to escape); secure blender lid on blender. Place a clean towel over opening in blender lid (to avoid spills). Blend until smooth. Pour into a large bowl. Repeat procedure with remaining chili sauce mixture.