In a medium saucepan over medium heat, add oil, and sauté garlic, shallots, and chili (if using) until golden, about 2 to 3 minutes.
Add hoisin and cashews, mix well until bubbly. Add coconut water.
Continue to stir for a few minutes until well combined and thickened. If you would like the sauce thicker, you may make a slurry with a mix of 1 tablespoon each of water and tapioca or corn starch.