Lewis Hamilton thinks Red Bull has looked "incredibly strong" in recent races and has become Mercedes' closest competitor.
Red Bull claimed a double podium in Germany, moving ahead of Ferrari and into second in the championship as a result. Team boss Christian Horner has already turned his attentions to cutting the gap to Mercedes after the summer break.
Hamilton agrees the former world champions can continue to threaten in the second half of the season.
"They've got a very, very strong team," he said. "I think Red Bull have definitely picked up with their engine performance but also they've got great downforce. I don't know why they closed up a little bit more than others [in recent races] but they're definitely looking incredibly strong.
"Ferrari looked strong at one point during the [German GP] weekend and then they seemed to fade off more so in the race, so Red Bull is definitely our closest competitor."
Though he is impressed with the form of Daniel Ricciardo and Max Verstappen, Hamilton thinks the strength of the Red Bull team goes way beyond its two drivers.
"Daniel is performing really well and so is Max, and it's not just because of them it's because they've got a great team, just like my [Germany win] is not just because of me, it's because of this great team."
Despite moving ahead of Ferrari by 14 points, Red Bull still sits 159 behind the reigning world champions in the constructors' championship. Daniel Ricciardo sits as best of the rest behind Hamilton and Nico Rosberg in the drivers' championship, 84 points down.