Heat ¼ cup of the reserved shallot oil in a wide braising dish or Dutch oven over medium heat. When the oil is shimmering, add the tomato paste and cook, stirring frequently, until darkened, 2 to 3 minutes. Add half the sliced chiles and all the diced tomatoes. Cover with a lid and cook until the tomatoes have broken down, 8 to 12 minutes. Add the marinated lamb and half the fried shallots. Cook, stirring occasionally, until the lamb has cooked and the sauce thickens, about 1 hour and 40 minutes. If needed, remove the lid to let the sauce thicken further.
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