Daniel Ricciardo has explained his reasons for remaining with Red Bull after confirming he has agreed to a contract deal which will keep him at the team until the end of the 2018 season.

The Australian driver had been touted with a potential switch to Ferrari having made his desire clear to be with a team he feels can challenge for F1 world titles.

After a turbulent start to 2016, which saw a tyre strategy error force him to miss out on a potential win in Spain while a pit stop blunder denied him victory having led in Monaco, Ricciardo has been assured by Red Bull of its future plans and sees it as the strongest team to take the battle to Mercedes.

"It is one that goes both sides. We want to win and this year is going to be tough for a world title but where we are this year is where we are, can't do anything about it now," Ricciardo said. "Looking to next year and spending time with the team and what is ahead I think it is the best place to be to try to challenge Mercedes - that is where it stems from."

Ricciardo informally confirmed his contract extension to remain with Red Bull until the end of 2018 in the pre-event Austrian Grand Prix drivers' press conference.

The news comes after Red Bull declared it had taken up the option in Carlos Sainz's contract to retain the Spaniard at Toro Rosso for 2017.

Ricciardo's team-mate Max Verstappen has also been confirmed for next year having signed a new deal with Red Bull after being promoted to the top team at the expense of Daniil Kvyat.