Liverpool escaped a damaging situation at Craven Cottage by beating Fulham 2-1 thanks to a late James Milner penalty.
Speaking on his podcast, Neville explains how he believes that a draw on Sunday would have been catastrophic for Liverpool.
“There will be times where Liverpool drop points before the end of the season, so too will Manchester City I think, but it couldn’t be on Sunday against Fulham,” he said.
“They’ll have known that was a big moment.
“Manchester City’s game in hand is at Manchester United, at Old Trafford, on April 24. There’s an opportunity for Liverpool here to step clear.”
The win against the Cottagers ensured Liverpool leapfrogged City to go top of the table having played a game more. With Pep Guardiola’s side only playing their game in hand at the end of April, it gives Liverpool the chance to pile the pressure on their rivals.
Any slip-ups from City will hand a huge advantage to the Reds with just a handful of games to play this season. While Liverpool haven’t been prolific, the form of Sadio Mane will be key between now and the end of the season.
The strength of Liverpool’s defence will also be crucial and Klopp will turn to Virgil van Dijk to ensure that the likes of Spurs and Chelsea don’t hurt the Merseysiders’ title chances.