Remove the stem, seeds, and veins from the chiles. Lightly toast in a medium skillet, then transfer to a heat-resistant bowl.
Boil the water, then pour 2 cups over the chiles. Cover and let soak for 15 minutes.
Reserve water, and transfer chiles to a blender. Add the tomatoes, onion, garlic, jalapeño, and paprika. Purée until smooth.
Heat a medium saucepan over medium with the oil. Carefully pour in the purée (it'll likely splatter) and bring the sauce to a boil. Reduce heat to a simmer, then partially cover and cook to thicken. Stirring occasionally, it'll take about 15 minutes. Add water if it gets too dry.
Remove from heat and let rest until ready to use. If making ahead, cover and refrigerate for up to three days, just be sure to warm it up a bit before using.