Walker was left out of Guardiola's squad for the third-round tie, with the Spanish manager saying the right back had asked to "explore options abroad".
"Two days ago, Kyle asked to explore the options to play abroad and end his career. And for that reason, I preferred playing other players," Guardiola said.
"He had already asked for it two years ago, but Bayern Munich's offer at the time wasn't good enough and so the club and I told him how important he was to us."
Walker joined City from Tottenham Hotspur in a deal worth around 50 million pounds ($61.02 million) and has made 319 appearances. He helped the club win 17 trophies, including six Premier League titles and their first Champions League.
"We cannot understand the success we have had these years without Kyle. It's impossible," Guardiola added.
"I still am pretty convinced that there's no one in our job that doesn't want to be where they are who can perform and be exactly what they want to be.
"He asked to explore, it doesn't mean it's going to happen because you never know the situation.
"I respect him a lot because I'm more than grateful since he has been many years for us. He's been important for the national team and important for our team."
Walker has seen his playing time reduced this season, making just nine Premier League starts, with local media suggesting Saudi Arabia could be his next destination.