Ricciardo has impressed in the Red Bull this season, picking up 192 points.
He won the Azerbaijan Grand Prix and has reached the podium in eight further races this season.
His performances are said to have caught the eye of Ferrari, who are already planning their driver roster for the upcoming years.
Ricciardo’s contract expires at the end of next season but Red Bull boss Christian Horner is ready to offer the Aussie a new deal, along with his team-mate Max Verstappen.
“He’s technically out of contract at the end of 2018 because he will have completed a five-year contract,” Horner told motorsport.com.
“But what is absolutely clear is that it’s our intention to retain both of our drivers, I would say until 2020.”
Ricciardo is not the only F1 driver whose contract expires soon.
Both Lewis Hamilton (2018) and Fernando Alonso (2017) could be looking for new drives in the near future.
Mercedes are unlikely to let Hamilton leave and are expected to offer him a lucrative new contract.
Alonso, meanwhile, is tipped to leave McLaren following another dismal season.
The team’s decision to end its relationship with Honda and move to Renault engines doesn’t seem to have convinced the Spaniard that McLaren is worth sticking with.