Construction of an oil refinery began in 1964 and it opened in 1967. By 1989, Assab had a population of 39,600 inhabitants. The port facilities were greatly expanded in the early 1990s, with the construction of a new terminal. The oil refinery was shut down for economic reasons in 1997. Ethiopia used Assab as the port for two-thirds of its trade with the world until the Eritrean–Ethiopian War broke out in 1998. Borders between Eritrea and Ethiopia closed and trade with Ethiopia ceased. The port and the port town declined and by 2005 the population had dropped to an estimated 20,222 inhabitants.