If using vermicelli place in a bowl and break into about 1-inch pieces.
Heat oil in a large saucepan over medium-high heat. Add fideo and toast, gently moving the pasta around in the oil until it changes color, about 3-4 minutes. Remove to a plate with a slotted spoon and set aside. It's okay if a few noodles remain.
Add onion to the oil, season with salt and pepper, and cook until translucent, about 5 minutes. Add garlic and cook 1 minute longer. Add tomatoes, broth, and oregano. Bring to a boil then lower heat to a simmer. Cover and cook until onions are tender, about 15 minutes. Add salt and sugar.
Blend tomato mixture with a immersion blender, or transfer to a blender and blend until smooth. Return to the pot and add more salt or sugar if necessary. Add noodles and stir to coat. Let sit a minute or two or until noodles are tender, then serve.