Press the "Sauté" button on your Instant Pot and adjust it to the "Normal" setting.
Heat the oil in the Instant Pot. Once hot, add onion and garlic, and sauté until they become translucent and fragrant about 2-3 minutes.
Add the mini sweet peppers and cilantro stalks and continue to sauté for another 1-2 minutes until they begin to soften.
Now, add the diced peaches and a tablespoon of sugar and stir well to combine. Cook for an additional 3-5 minutes, or until the peaches start to break down and release their juices.
Add Thai red chilies and salt to taste and sauté for 1-2 minutes.
Pour water and deglaze the pot, scraping up any bits stuck to the bottom.
Cancel the "Sauté" function. Close the Instant Pot lid and set it to "Pressure Cook" (or "Manual") mode on high pressure for 10 minutes. Ensure the steam release valve is in the sealing position.
Allow the Instant Pot to release pressure naturally for 10-15 minutes. Then, carefully vent the remaining pressure and open the lid.
Use an immersion blender or transfer the mixture to a regular blender. Blend until the sauce reaches your desired consistency.
If you prefer a smoother sauce, strain the mixture through a fine-mesh strainer or cheesecloth to remove any solids.
Taste the hot sauce and adjust the sweetness, spiciness, and saltiness according to your preference. You can add more sugar or vinegar as needed.
Transfer the hot sauce to a clean, airtight container or bottle and store it in the refrigerator. It will keep for several weeks.