You forget the blockade. It may not be fatal to Germany, but it is crippling and certainly prevents any profitable gains from the war being realised by eliminating access to overseas markets.
If there's a ceasefire - formal or not - then the blockade remains.
But of course if the blockade continues then Germany will insist on continuing submarine warfare. Either the armistice extends to sea as well as land or it does not. It can't apply to one side and not the other. So the Entente is still getting hurt.
In any case, the blockade didn't get really watertight until after US entry into the war, which allowed exports to the Northern Neutrals (the main loophole in it) to be controlled at source. Absent this, the blockade will be a nuisance, but far from crippling.
Personally I find the concept of a peace of exhaustion to be unlikely, at least in the short term.
Agreed. Not very likely in the longer term either. In real life one side or the other will exhaust (its morale even if not its material resources) before the other - and then the other side wins.
While both sides can conserve strength by sitting on the defensive, if they both do this then there is less urgency to actually end the war, and both sides have so much invested in the war that agreeing terms would appear to be very difficult without strong internal pressure to do so, a la Russia and its revolutions.
How can both sides stand on the defensive? The CP can, if they don't face the prospect of huge numbers of American troops coming to join the Entente. But for the Entente to do so means giving up hope of dislodging the Germans from the lands they occupy, and eventually (since Germany isn't going to just spontaneously collapse in any conceivable time frame) going into a Conference at which the CP holds 90% of the bargaining chips. At some point the Entente must attack or else acknowledge defeat.