Heat oil in a medium saucepan over medium-high heat. Add onion; saute 4 minutes. Add oregano, basil, red pepper, bay leaves, and garlic; saute 1 minute. Stir in remaining ingredients; bring to a boil. Reduce heat, and simmer 20 minutes.
Note: You can refrigerate the remaining sauce in an airtight container for up to 1 week and use it again.