In a large saucepan, heat oil over medium-high heat. Cook onion in hot oil until tender but not brown, stirring occasionally. Stir in smoked tomatoes, water, tomato paste, sugar, thyme, garlic, bay leaf, salt and pepper. Bring to boiling; reduce heat. Cover and simmer for 20 minutes. Remove from heat and cool for 10 minutes. Remove and discard thyme sprigs and bay leaf.