Israel "supplies" Gaza with water because the source of Wadi Gaza (the Gaza River) happens to be on Israeli land.
That's like saying "The US supplies Mexico with water" because the Colorado River originates in the US and the mouth of it is on Mexican soil. Reality: America does all in its power to give as little water as possible to Mexico and the water that reaches the Gulf is a mere trickle, having been largely syphoned off by multiple US states before that point.
What I've read indicates Israel controls the water supply to Gaza and uses and abuses that fact in a hostile fashion.