Coat the bottom of a large pot with the oil and place it over medium heat. Once the oil is hot, add the onion. Sweat the onion for about 10 minutes, stirring often, until it starts to soften.
Stir in the bell peppers. Cook the peppers and onion together for about 10 minutes, stirring occasionally, until the peppers soften and brighten a bit in color.
Push the peppers and onions to the side of the pot and add the garlic. Sauté the garlic for about 1 minute, stirring constantly, until it becomes very fragrant.
Stir in the tomato sauce, balsamic vinegar, and sugar. Bring the sauce to a simmer, then lower the heat and let the mixture cook at a low simmer for about 20 minutes, stirring occasionally, until the peppers are very soft. You can add a bit of water if the sauce becomes too thick while cooking.
While the sauce simmers, cook the pasta according to the package directions, until al dente. Reserve about 1 cup of the cooking water, then drain the pasta into a colander when done.
Stir the cooked pasta into the sauce. Cook the mixture for about a minute, stirring constantly. Thin the sauce with some of the reserved pasta water if needed.
Remove the pot from heat. Stir in the basil and season the pasta with salt and pepper to taste.
Serve.