In a small saucepan, combine 1 cup water, 1/4 cup oyster paste, 2 tablespoons soy sauce, and 1 tablespoon sugar.

Place the saucepan over medium heat and stir until the mixture begins to simmer, about 5 minutes.

In a small bowl, mix 1 teaspoon cornstarch with 1 tablespoon cold water until smooth to form a slurry.

Slowly pour the cornstarch slurry into the simmering sauce while whisking continuously, and cook until thickened, about 1–2 minutes.

Remove the saucepan from heat and stir in 1 teaspoon sesame oil.

Strain the sauce through a fine-mesh strainer into a clean jar for a smooth texture.

Allow the sauce to cool to room temperature, about 30 minutes, before sealing the jar.

Use the homemade oyster sauce to enhance stir-fries, marinades, or as a dipping sauce.