Steps:
- In a large, heavy saucepan, heat the vegetable oil over medium-low heat; add the onions and sauté just until translucent, 4 to 5 minutes (do not let them brown). Add the chiles, garlic, and oregano and simmer for 10 minutes, stirring occasionally. Add 2 cups of the water, salt, and sugar and simmer, stirring occasionally, for 30 minutes more. Remove from the heat.
- In the jar of a blender, add the chile mixture, lime juice, cilantro, and the remaining 1/4 cup water. Puree until smooth.
- In large, heavy nonstick skillet, heat the peanut oil over high heat until just smoking. Refry the sauce at a sizzle, stirring constantly, until it coats a wooden spoon, 3 to 5 minutes. Do not allow the sauce to become too thick; add more liquid if necessary. It will keep 1 week in the refrigerator and 1 month in the freezer.
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