(Makes 20.) Lightly oil baking sheets. Sprinkle yeast and sugar over 1/4 cup warm water in large bowl. Stir to dissolve. Let stand until foamy, about 5 minutes. Add oil and beat 2 minutes, using wooden spoon. Stir in salt and 1/2 cup warm water. Alternately stir in 3 cups flour (1 cup at a time) and remaining 3/4 cup warm water, beating until dough is soft and sticky.
Sprinkle remaining 1/2 cup flour on work surface. Turn dough out and knead until springy and flour is absorbed, about 3 minutes. Cover dough and let stand 5 minutes. Shape dough into 20-inch cylinder. Cut into 20 pieces. Let stand 4 minutes. Using palm of hand, roll each piece into cylinder. Tie into knot. Arrange on prepared sheets, spacing 1 inch apart. Cover and let stand in warm draft-free area until starting to rise, 20 to 30 minutes.
Preheat oven to 300 deg. Beat egg with 1 tablespoon water for glaze.
Brush over bread knots. Bake until golden, 30 to 35 minutes. Serve bread knots either warm or at room temperature.
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