How much sun is it getting? Is it shaded by its neighbor the olive tree, or by other plants in your garden?

I've found that the leaves will burn if they are wet when the sun shines on them.
Check for ants in the area. I had a very unusual thing happen in that the ants made nests amoung the roots and must be able to make some sort of coating to protect their nests from water. So.... when I watered the roots weren't able to take-up the water and the tree died.

Also, dig down to make sure the soil is indeed getting wet. Sometimes an ionic bond forms and the water can't penetrate. If this appears to be happening put a couple of drops of dish soap in a bucket of water and slowly water the soil. This should help break that bond.

I don't think you should do anymore fertilizing for awhile.

Good luck with your investigations.

I'm wondering what's going on underground. That wobbly-looking trunk seems a bit spinldy to me, and makes me wonder whether the tree has a healthy root system. If your soil deeper down is solid clay or rocky, the roots won't be able to get down and spread out as far as they'd like to, which means they might not be able to access the nutrients so easily - and that always results in a tree which is prone to disease and bugs.

Just thinking aloud.

Hey kirkcy, I'll be in Cyprus next week!! Will be in the Pafos area, are you around there?

I have had great trouble rooting/growing bays, and my climate is exactly like yours. Black soot disease, cuttings won't root, etc. Rocky, dry Middle East summer soil, hard as a rock, just like you. There are quite a few growing wild here though. Let me know!!!

Batya, a fellow gardenweb junkie, but in your neighborhood.....

Thanks for all the answers.

@ nygardener, its getting shade from the olive trees most of the day, but it also gets a lot of midday sun as the olives are planted to the west side. Also the white gravel reflects a lot of sunlight.

Am waiting for the day to cool down a bit and will try digging down to inspect and will post some pics too.

@ Batya, i live in Nicosia which is inland. Paphos gets more rainfall and its always a few degrees cooler, but since it is near the coast the humidity can rise to 100% when there are heatwave outbreaks which is not fun at all... but i guess Israel shares the same conditions so you must be used to it. :)

Thanks again for the answers and i will give updates soon.