It emerged last week that City had rejected an attempt from Chelsea to sign the young midfielder.
And Guardiola said, "We are not able to loan or sell players right now - we have had a lot of injury problems. We need O’Reilly, (James) McAtee, (Divin) Mubama - we have a lot of games and we need them."
On the 19-year-old, Guardiola recalled seeing O'Reilly's emergence last season.
"He had a long, long injury last season," Guardiola said. "He came back in the middle of last season and trained with us and I said, ‘Wow’.
"This guy has good things. From corners, good header, so strong in the duels, in the small spaces he moves well. As an attacking midfielder, you will see him arrive (in the box), he can play the dual position, holding midfielder, attacking midfielder. It’s because of the academy, we are blessed to have these players."