Unable to provision a node with machineset on Azure

Issue

Scaling the machineset fails with the below error:

InvalidConfiguration: failed to reconcile machine "machine-name": failed to create vm machine-name: failure sending request for machine machine-name: cannot create vm: compute.VirtualMachinesClient#CreateOrUpdate: Failure sending request: StatusCode=400 -- Original Error: Code="LinkedInvalidPropertyId" Message="Property id '' at path 'properties.storageProfile.osDisk.managedDisk.diskEncryptionSet.id' is invalid. Expect fully qualified resource Id that start with '/subscriptions/{subscriptionId}' or '/providers/{resourceProviderNamespace}/'."