Ricciardo ended FP2 fifth fastest, and was just 0.390s off Lewis Hamilton's record lap time around the Austrian circuit.
Vettel, who like Hamilton has won three times so far this year, was only 0.147 seconds slower than his rival on Friday and Ferrari have a habit of closing the gap by the time Sunday comes around.
Hamilton was leading the race in Baku but was forced to pit midway through on safety grounds after his headrest came loose.
That may give Mercedes pause for thought heading into Saturday's final practice and qualifying.
"This auto is so quick in comparison to what we raced here past year".
"It's a short track, so you imagine it'll be close", he said. The balance of the vehicle feels good and we'll fine tune the setup some more tonight to be ready for qualifying.More news: Are Kanye West & JAY-Z Still Friends? West Is Reportedly Leaving Tidal
In P1, Vettel clipped the kerb at turn one.
Several drivers were unable to keep their vehicles on track in Friday practice, with Lewis Hamilton, Valtteri Bottas and Fernando Alonso among those ending up on the gravel at various points throughout the day.
Championship leader Sebastian Vettel was fourth, 0.449s off title rival Hamilton, and was one of the cars to spin early in the session after losing the rear of his auto on the Turn 1 apex.
Vettel was given a time penalty during that race but escaped further punishment from the FIA, motor sport's governing body, following a hearing on Monday.
Rarely are the fortunes of the fourth and fifth-placed drivers in a race so tightly scrutinised but, then again, it is also just as uncommon to see a driver deliberately spear his auto into an opponent as Vettel did to Hamilton in Baku.
"We could not get a full long run at the end, we had a couple of issues, " Ricciardo added.