Slice the jalapeño peppers. Leave the seeds in if you prefer a spicier sauce.
Finely chop the red onion and garlic.
Heat the olive oil in a saucepan over medium heat. Sauté the onion and garlic for 3-4 minutes, until softened.
Add the sliced jalapeño peppers and sauté for another 2 minutes.
Pour in the vinegar, lime juice, and water. Add the salt and sugar.
Bring to a boil, then reduce heat and simmer for 10 minutes to allow the flavors to meld.
Use an immersion blender or regular blender to purée the sauce until smooth.
Let it cool completely, then pour into a sterilized jar. Store in the refrigerator for up to 1 week.
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