The Security Cabinet approved Sunday a 35 percent reduction in Israel's electricity supply to the Gaza Strip.
Israel takes the money for Gaza's electricity from the taxes it collects on behalf of the Palestinian Authority.
Palestinian President Mahmoud Abbas has recently asked to reduce the amount of money taken out of the tax funds to pay for electricity in the strip.
Israel will continue providing Gaza with NIS 65 million worth of electricity every month.
Because of the electricity crisis in the strip, an average Palestinian home gets about six hours of electricity per day.
The Security Cabinet also discussed the possibility of escalation in the Gaza Strip in light of concerns Qatar, which remains isolated amid a growing diplomatic crisis in the Arab world, would stop its support for Hamas.
IDF Chief of Staff Lt. Gen. Gadi Eisenkot, Military Intelligence Directorate (MID) head Maj. Gen. Herzi Halevi, and the Coordinator of Government Activities in the Territories (COGAT) Maj. Gen. Yoav Mordechai briefed the ministers on the situation and warned of deterioration of the humanitarian situation in the Gaza Strip.
While the IDF believes Hamas is not interested in a military conflict with Israel at this time, the generals noted Israel must nevertheless be prepared for a conflict to break out if one side miscalculates the other side's actions.
Qatar is currently the main financer of civilian activity in the Gaza Strip. If this support stops because of the Gulf nations' boycott against Doha, the humanitarian situation in the strip could deteriorate, leading to possible military escalation as well.
According to the briefing given to the ministers, neither Egypt nor Palestinian President Mahmoud Abbas are expected to come to the aid of the Gazans, and Israel is left with no choice but to act with extreme caution to prevent the situation from escalating.
The IDF chief and MID head also presented the ministers with their assessments on how Hamas will react to the underground barrier project meant to stop tunnels from Gaza to cross into Israel.