Increasing aridity and global climate change are posing significant sustainability challenges to olive agroecosystems. Therefore, an experiment was conducted over two consecutive years in an olive orchard, comparing regulated (RDI) and sustained deficit irrigation (SDI) strategies. Alongside a fully irrigated control treatment (FI), T0 (100% ETc), four RDI regimes were tested: T1 (SP 100/NP 70% ETc), T2 (SP 100/NP 60% ETc), T3 (SP 80/NP 70% ETc), and T4 (SP 80/NP 60% ETc), based on the water stress sensitivity of phenological phases (SP for sensitive periods and NP for normal period). Two SDI regimes were also evaluated: T5 (70% ETc) and T6 (60% ETc). The study assessed the impact of irrigation strategies on shoot growth, oil content, fruit yield and water productivity (WP) over two years 2021 and 2022 on the olive cultivar Menara. Results showed that a 40% reduction in water supply (T6) severely restricted shoot growth, with a 44% decrease in 2022 compared to the control (T0). Oil content increased significantly with reduced irrigation, particularly in fruits from trees under RDI treatments T3 and T4, which showed a 12% increase without disrupting oil accumulation. RDI treatments (T3 and T4) exhibited the highest WP, outperforming SDI treatments (T5 and T6), which showed a 30–40% decline in WP compared to T0. Yield reductions were most pronounced under SDI, with T5 and T6 producing only 46.8% and 48.8% of the control yield, respectively. These findings highlight the significance of water management strategies and their effects on key agronomic parameters. Specifically, the results showed that moderate and controlled water stress under RDI, particularly in treatments T3 and T4, did not substantially impact fruit oil content or yield in the Menara olive cultivar.