- Add coconut oil to a medium pot over medium heat. Once melted, add shallot and garlic and cook for two minutes until fragrant.
- Add flour to the pot with paprika and stir to combine. Let cook for a minute to cook out any flour taste.
- Add cashews, water, and almond milk and bring to a simmer. Stir in nutritional yeast and turn heat down to low. Simmer for 8-10 minutes until cashews soften slightly.
- Let mixture cool slightly until it isn’t steaming hot and transfer mixture to a blender. Blend until very smooth. If it seems very thick, add more almond milk or water in 2 tablespoon batches.
- Once blended and smooth, return to pot and keep warm until serving over low heat. Season sauce to taste with salt and pepper.
Sauce will stay liquid as it cools, but will solidify a bit. If you want to thin it out again, reheat it gently over low heat and add a tablespoon or two of liquid back to it.