The Brit's non-finish now sees Sebastian Vettel top the driver standings by one point.
Lewis Hamilton says it's impossible to say how the F1 season will pan out; especially in a season where both Mercedes and Ferrari have at times appeared dominant while other times have been way off the pace.
The Haas cars of Romain Grosjean and Kevin Magnussen finished in fourth and fifth respectively, ahead of the Force India cars of Esteban Ocon and Sergio Perez.
Australian Daniel Ricciardo, Verstappen's teammate who was celebrating his 29th birthday, was in a podium position but heavy rear tyre wear took its toll and he retired with a broken exhaust.
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"I'm not a fan of these penalties", he said.
In turn seven of the first lap, Verstappen saw a gap that the Finn had left him as he was locking up left right and centre, and the Dutchman dove into it, touching Raikkonen as he went past him.
Verstappen finished the race in one hour, 21 minutes, and 56 seconds, while Raikkonen ended up second, 1.5 seconds behind the victor. Valtteri Bottas (Mercedes) - 92 7. Nico Hulkenberg ("Reno") - 34 10. "My gearbox is gone", he told the team. Before being sidelined by a fuel pressure problem, he had already dropped from first to fourth when Mercedes failed to bring him in for an immediate pitstop after the virtual safety vehicle had been deployed. Ferrari and Red Bull have lost points.
The Austrian penalty was imposed despite both Vettel and Sainz progressing to the final phase of qualifying without any difficulty. "It's my mistake. Do what you can", replied Mercedes strategist James Vowles.
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It meant the likes of Kimi Raikkonen and Max Verstappen emerged ahead of the Brit when he eventually had to pit a few laps later.
Championship leader Sebastian Vettel was third fastest for Ferrari, followed by Australian Daniel Ricciardo for Red Bull, Ferrari's Kimi Raikkonen and Austrian GP victor Max Verstappen, racing for Red Bull. I think we have to be very honest with ourselves and our fans that this is going to be a journey. I'm not going to be able to pass these guys.
The decision made Hamilton unhappy, telling his crew that they have thrown away the win.
It was clear that tyre wear was emerging as a critical factor. On lap 53, he pitted again for super-softs, dropping a place to fifth behind Ricciardo, who nearly immediately slowed and stopped. Had he started from third on the grid, where he originally qualified, he would have been in an ideal position to capitalise on the retirement of the two Mercedes drivers and finish ahead of eventual race victor Max Verstappen.
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Most keepers would have been happy to clutch it to their chest to let a few seconds pass to ensure extra time. And The Three Lions are battle-tested after an extremely hard-fought Round of 16 fixture.