Sauté Aromatics: In a medium saucepan, heat the olive oil over medium heat. Add the finely chopped onion and sauté until translucent, about 5 minutes. Add the minced garlic and cook for an additional minute, stirring frequently to prevent burning.

Add Herbs and Spices: Incorporate the dried oregano, dried basil, dried thyme, smoked paprika, and red pepper flakes (if using) into the onion and garlic mixture. Stir and cook for about 1 minute to release the flavors.

Combine Tomatoes and Sweeteners: Add the crushed tomatoes and tomato paste to the saucepan, stirring to combine. Mix in the granulated sugar and honey, ensuring they dissolve into the sauce.

Introduce Liquid and Bay Leaf: Pour in the balsamic vinegar and water, stirring to achieve your desired sauce consistency. Add the bay leaf to the mixture.

Simmer the Sauce: Bring the sauce to a gentle simmer over medium-low heat. Allow it to cook for 20-30 minutes, stirring occasionally, until it thickens and the flavors meld together.

Season to Taste: Remove the bay leaf. Taste the sauce and adjust the seasoning with salt and black pepper as needed. If you prefer a smoother sauce, you can use an immersion blender to purée it to your desired consistency.

Cool and Store: Once the sauce has cooled, transfer it to an airtight container. It can be stored in the refrigerator for up to a week or frozen for longer preservation.