A strong start from the German saw him pass Verstappen on the opening lap, at which point the safety car was deployed as a result of Esteban Ocon's 'crash'.
At the re-start, Vettel held his position until lap 15, when the German, who like those around him had started on the hypersofts, went for the undercut, opting to switch to the ultrasofts of which they had little previous experience over the course of the weekend.
Subsequently, Hamilton and Verstappen responded, both switching to the more durable softs and, crucially, the Red Bull driver managing to get ahead of the Ferrari shortly after exiting the pits following his stop.
It was an aggressive strategy - unusual for Ferrari - and though he now remains 40 points adrift of Hamilton, Vettel defended his team.
"The decision we took in the race, the decisions to try to be aggressive, if it works it's great, today it didn't work," he said.
"Obviously it didn't work by quite a bit and we need to look into that," he admitted. "But I believe we saw something and that's why we go for it.
"Obviously inside the car it's difficult to be on top of everything because you cannot see where you come out etc. We were aggressive in trying to get ahead, taking into account that we have to go through traffic, which in the end bit us also, to lose the second place.
"If it doesn't work it is always easy to criticise but I will always defend what we did. Overall, we had a very strong package, both Kimi and myself, I think we looked very competitive throughout practice but in the end if you look at the race result we finished third and fifth. Like yesterday, probably not where the speed of our car belongs so that's what I mean by saying we didn't get everything out of ourselves.
"We didn't come here expecting to lose ten points," he admitted, "but, having had the race that we had, I think there's a full justification for losing those ten points and we take it.
"There is still a long way to go and a lot of points to score," he insisted. "I never believed that we had the fastest car by a big margin, as people said. I know that we have a very good car. I think we started the season well and then we were about half a second behind in qualifying and it was crucial to get back, which we manage to - and then we had a bit of a rough time but overall I think the speed is there but I think it's a match in qualifying as much as in the race.
"Today, if anything, I think we were a little bit slower, which we need to have a look and understand - but also it's difficult to draw the conclusion because our race, my race was very different. I was on the oldest tyres and probably on the tyre that was not supposed to last that long. You would probably like to go out and do the same stint on the same tyres, just to be able to compare - but that's not the race that we had today.
"Russia, I think, has been getting better the last years for us," he said of the next race on the schedule, "so it should suit our car as well.
"I don't think we have any tracks to fear that are coming. I think our car is working pretty much everywhere and that's a strength of our car, so no need to be afraid of what's coming."
Check out our Sunday gallery from Singapore, here.