Confident that momentum is on Red Bull's side, Christian Horner feels a "nudge a bit closer" on the engine could allow his drivers to fight Mercedes.
Last season Red Bull bounced back from a win-less 2015 championship with two victories, the only team aside from Mercedes to finish P1 on a Sunday afternoon.
Added to that Daniel Ricciardo was the only driver aside from Lewis Hamilton and World Champion Nico Rosberg to claim a pole position.
"It feels like we are building momentum," team boss Horner told Sky Sports F1.
"2016 has been all about building that momentum and there is a feeling of real optimism within the team that if we can nudge a bit closer on the engine… chassis we are hoping to come up with a good car to give our guys the tools to fight Mercedes next year."
Red Bull will be helped in their quest by a spate of new regulations as Formula 1 is overhauling the car's aerodynamics.
For many seasons that has been the four-time World Champion's forte, however, Horner concedes Red Bull also need a further step forward from their engine partner, Renault.
He said: "2017 is a clean sheet of paper and no one knows where the opposition are. We've been quite good with regulation changes before, but nothing can be taken for granted.
"We are hoping similar progress can be made with the engine and if that happens I think we have two very capable drivers of taking the fight to Mercedes.
"Mercedes will be the favourites heading into next year, but if we can narrow that gap down and put them under a bit of pressure it would be great for everyone."