In a large skillet cook onion, covered, in hot oil over medium heat for 20 minutes, stirring occasionally. (Reduce heat to medium-low if onions begin to brown.) Add sweet and hot peppers; cover and cook 5 minutes more or until pepper is just tender. Add remaining ingredients. Bring to boiling; reduce heat and simmer, uncovered, 5 minutes. Cool; chill to store.
Serve over bratwurst, hot dogs, or burgers. Makes about 3 cups sauce (enough for 12 sandwiches).