In large skillet or large saucepan, heat oil and fennel seeds together over medium heat. Once fennel seeds are fragrant, about 1 minute, add onion and garlic and cook, stirring often, until onion is translucent, about 4 minutes. Add canned tomatoes along with their juices, tomato paste, salt, oregano, coconut sugar (if using), and crushed red pepper flakes. Cook, stirring often, allowing tomatoes to soften and break down a bit, about 5 minutes. Stir in water and reserved chopped red peppers. While stirring, let mixture come to a simmer. At this point, you can adjust the consistency of your sauce. If you like your sauce to have some texture and be a bit chunky, leave as is. Alternatively, purée sauce in blender for a smooth consistency and return back to skillet, bringing to a simmer over medium heat.