Heat olive oil in a large saucepan or pot over medium heat. Add the finely diced onion and cook, stirring occasionally, until softened and translucent, about 5-7 minutes.

Add the minced garlic and cook for another minute until fragrant, being careful not to burn it.

Add the chopped peaches, apple cider vinegar, brown sugar, molasses, Worcestershire sauce, Dijon mustard, smoked paprika, chili powder, cayenne pepper, salt, and black pepper to the saucepan. Stir well to combine all ingredients.

Bring the mixture to a gentle simmer. Reduce the heat to low, cover, and let it cook for 20-25 minutes, stirring occasionally, until the peaches are very soft and easily mashable.

Carefully remove the saucepan from the heat. Using an immersion blender, blend the sauce directly in the pot until it reaches your desired consistency (smooth or slightly chunky). If you don't have an immersion blender, carefully transfer the mixture to a regular blender and blend until smooth. (Exercise caution when blending hot liquids).

Return the sauce to the stovetop over low heat. If the sauce is too thick, add water or peach nectar a tablespoon at a time until desired consistency is reached. Taste and adjust seasonings as needed, adding more salt, pepper, or a pinch more cayenne if desired.

Simmer for another 5 minutes, uncovered, to allow the flavors to meld and the sauce to thicken slightly if needed.

Remove from heat and let cool completely before serving or storing.