Travel to the country will also be affected in light of an announcement from Saudia Airlines on Tuesday that it will suspend flights to and from Canada starting August 13.
The United States "raised" the case with Riyadh, she said, adding: "The United States has respect for internationally recognized freedoms and also individual liberties".
Officials said they would cover cancellation fees, issue refunds and find alternative flights for stranded travellers, according to a story on the CBC National website.
His case long has been raised by worldwide human rights groups and Western diplomats, including Canadians, who have called on Saudi Arabia to free him.
Sources say the U.S. is the most likely destination for Saudi scholarship students in Canada.
Saudi Arabia's market closure comes on the heels of ongoing trade disputes in other key Canadian grain markets including Italy, Peru, Vietnam, and India as well as increased protectionist sentiments within the United States.
Just two months ago, Saudi women were given the right to drive a vehicle, yet several of the country's most prominent women's rights activists - including some who fought for years to drive - were arrested earlier this year on national security grounds.
On Monday, Saudi foreign minister Adel al-Jubeir again criticised Canada's calls to free arrested civil society activists as a position built on "misleading" information.
Several Arab nations in the region have expressed support for their Saudi allies in the dispute with Canada.
"We're going to stand with the values that we know are important for Canadians, and Saudi Arabia will take the decisions that they will take", Finance Minister Bill Morneau said Tuesday when asked whether the spat could imperil the General Dynamics agreement.
"We anticipate the majority, if not all, that are now enrolled are impacted by this decision", she said. Previously, Toronto was the only Canadian destination Saudia served.
The U.S. government has declined to come to Canada's defence in the growing diplomatic crisis over its criticism of Saudi Arabia's human-rights' record.
In her first public response to Saudi Arabia's actions, foreign minister Chrystia Freeland said, "Let me be very clear". Saudi Arabia announced it was suspending future trade with Canada and severing diplomatic ties. Riyadh accused Ottawa on Tuesday of interfering in its internal affairs. In 2015, Riyadh recalled its ambassador to Sweden and stopped issuing work visas for Swedes after the European Union member country's foreign minister described the Badawi court decision as "medieval" and the kingdom's ruling Saud family as presiding over a "dictatorship".
The sudden deterioration in the Saudi-Canadian relationship is likely grabbing the attention of people in the city of London, Ont., more than anywhere else in the country.