Does swearing by "Allah" with the intention of refraining from swearing constitute an oath, and is expiation obligatory if one then breaks it?

If you did not intend to make an oath by saying "Wallahi" to your grandmother, then there is nothing upon you. As for the expiation for an oath for one who has made it and then broken it, it is not valid through fasting unless one is unable to feed ten needy persons, or clothe them, or free a slave. If you are able to perform one of these types, then fasting is not sufficient for you, and the expiation remains binding upon you. It is advised to disregard obsessive thoughts.