Ethiopia and Eritrea signed an agreement at a summit in Saudi Arabia, bolstering an historic peace accord between the two former Horn of Africa enemies, officials said.

Authorities did not reveal exact details of the new deal signed on Sunday in Jeddah, but sources close to the Saudi government said it would help strengthen the truce and enhance security in the wider region.

Saudi King Salman hosted the signing ceremony which was also attended by his son, Crown Prince Mohammed bin Salman, and UN Secretary-General Antonio Guterres.

"The peace agreement between Ethiopia and Eritrea signed today in Jeddah is a historic event that will contribute to strengthening security and stability in the region," Saudi Foreign Minister Adel al-Jubeir said.

Ethiopia's Prime Minister Abiy Ahmed and Eritrea's President Isaias Afwerki signed a peace pact in July ending two decades of enmity sparked by a two-year border conflict which broke out in 1998.

Two land border crossings between Ethiopia and Eritrea were reopened last Tuesday for the first time in 20 years, crowning a rapid reconciliation between the former bitter enemies.

The warming of ties in the Horn of Africa has also seen Ethiopia and Eritrea re-open air links, embassies and trade routes.

'Wind of hope blowing in Horn of Africa'

Eritrea gained its independence from Ethiopia in the early 1990s, and war broke out later that decade over a border dispute.

A 2002 UN-backed boundary demarcation was meant to settle the dispute for good, but Ethiopia refused to abide by it.

A turnaround began in June when Abiy announced that Ethiopia would hand back to Eritrea the disputed areas including the flashpoint town of Badme where the first shots of the border war were fired.

Meanwhile, Guterres said Saudi Arabia will also host possible talks between the presidents of Djibouti and Eritrea on Monday and Tuesday.

The two nations have been at loggerheads for decades over a long-standing border dispute.

"There is a wind of hope blowing in the Horn of Africa," Guterres told journalists after the signing.

"It is not only the peace between Ethiopia and Eritrea - it is the fact that tomorrow and the day after tomorrow we will have, here in Saudi Arabia, the president of Djibouti and the president of Eritrea - two countries that have also been at odds with each other." the UN chief added.