Both sides are in contention for the top four places but sharing the spoils gave Manchester United and Arsenal renewed hope of finishing above them.
City and Liverpool are currently third and fourth respectively in the Premier League having played one and two games more than United and Arsenal.
Should the latter two win their games in hand, Liverpool could drop into sixth and City would be in serious danger of being caught.
The pressure to secure Champions League football was evident during Sunday's tense affair, though Liverpool arguably should have walked away with all three points.
James Milner's penalty and Sergio Aguero's 69th-minute equaliser made it 1-1, with Adam Lallana missing a golden opportunity to win the game in the final 10 minutes.
Roberto Firmino squared the ball to the Englishman for an easy finish but, rather uncharacteristically, he fluffed his lines and missed spectacularly.
A draw was probably the fair result but Pep Guardiola and Jurgen Klopp will both be disappointed with not winning.
There was one moment of comedy gold that helped ease the tension at the Etihad, though.
In the 17th minute, Guardiola and Klopp were caught arguing on the touchline after Klopp remonstrated with the referee over a decision.
But whereas most managers would square up to one another and carry on, the pair quickly made up with a pretty bizarre - yet hilarious - high five, instigated by Guardiola (see below).
GUARDIOLA AND KLOPP'S HIGH FIVE
Brilliant. Guardiola's high five was somewhat out of character having recently admitted he lacks the charisma that Klopp shows at Liverpool.
When asked if he and Klopp are the same, Guardiola told Sky Sports: "He celebrates the goals much better than me, he hugs his players much better than me!
"He is a charismatic trainer and I admire him a lot, because for a foreign manager to go to Germany, he took care of me.
"The first day when I lost the Super Cup [with Bayern], how gentle he was with me. He is a top trainer and the way we play is completely different.
"He is a German and I am a Catalan so the influence in our cultures are much different.
"It is of course a big pleasure to play against the big trainers in the world, to push myself against them."
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