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City's Bernardo Silva and Mateo Kovacic both misfired in the shootout to put Madrid in the driving seat.
Arsenal's defeat, their first in 12 league games, sees them remain second, two points behind City and level on points with third-placed Liverpool with six games left to play.
Verstappen, who becomes only the second driver to win three consecutive Japanese Grands Prix alongside seven-time world champion Michael Schumacher, now has a 13-point lead in the drivers standings over Perez.
Juergen Klopp's side have 70 points from 30 games, two ahead of Arsenal and three more than champions Manchester City.
Mikel Arteta's side moved into first place with 68 points from 30 games although Liverpool, who have 67, can move back to the summit with a home game against Sheffield United.
It was Verstappen's first DNF (did not finish) since retiring from Albert Park in the 2022 race and ended his run of race wins at nine.
Manchester United fanned the embers of their top-four hopes with a 2-0 win against visiting Everton.
Sergio Perez was runner-up under the Jeddah Corniche floodlights, last year's winner taking the chequered flag 13.643 seconds behind his triple world champion teammate who now has a 15-point lead in the standings.
The BBC said it had seen a report by FIA compliance officer Paolo Basarri to its ethics committee in which a whistleblower claimed the president had intervened to overturn a penalty given to Aston Martin's Fernando Alonso.
Mikel Arteta's team are third with 61 points after 27 games, a point behind Manchester City.