Explanation


Box 1: keyvault
Create an Azure Key Vault with az keyvault create and enable the Key Vault for use with disk encryption.
Specify a unique Key Vault name for keyvault_name as follows:
keyvault_name=myvaultname$RANDOM
az keyvault create \
--name $keyvault_name \
--resource-group $resourcegroup \
--location eastus \
--enabled-for-disk-encryption True
Box 2: keyvault key
The Azure platform needs to be granted access to request the cryptographic keys when the VM boots to decrypt the virtual disks. Create a cryptographic key in your Key Vault with az keyvault key create. The following example creates a key named myKey:
az keyvault key create \
--vault-name $keyvault_name \
--name myKey \
--protection software
Box 3: vm
Create a VM with az vm create. Only certain marketplace images support disk encryption. The following example creates a VM named myVM using an Ubuntu 16.04 LTS image:
az vm create \
--resource-group $resourcegroup \
--name myVM \
--image Canonical:UbuntuServer:16.04-LTS:latest \
--admin-username azureuser \
--generate-ssh-keys \
Box 4: vm encryption
Encrypt your VM with az vm encryption enable:
az vm encryption enable \
--resource-group $resourcegroup \
--name myVM \
--disk-encryption-keyvault $keyvault_name \
--key-encryption-key myKey \
--volume-type all
Note: seems to an error in the question. Should have enable instead of create.
Box 5: all
Encrypt both data and operating system.
References:
https://docs.microsoft.com/bs-latn-ba/azure/virtual-machines/linux/encrypt-disks