Posted a patch upstream :

https://www.redhat.com/archives/libvir-list/2018-May/msg01886.html

In my testing ensure that the fix for bz1400475 is also applied since the creation of the /dev/XXX device used for encryption will go through the same path.

A v2 was posted after review:

https://www.redhat.com/archives/libvir-list/2018-May/msg02109.html

after a slight adjustment, it was pushed upstream:

commit 57d6df39bd7eb8166fee68f4b6da03c0cb0802bf (origin/master, origin/HEAD, master, bz1560946)
Author: John Ferlan <jferlan>
Date:   Mon May 21 06:40:58 2018 -0400

    storage: Add capability to use LUKS encryption for disk backend
    
...
    
    Similar to the the Logical backend, use qemu-img on the created
    disk partition device to set up for LUKS encryption. Secret mgmt
    for the device can be complicated by a reboot possibly changing
    the path to the device if the infrastructure changes.
    
...

$ git describe 57d6df39bd7eb8166fee68f4b6da03c0cb0802bf
v4.3.0-373-g57d6df39bd
$

Verified on: libvirt-4.4.0-2.virtcov.el7.x86_64

1. Having a disk pool
# virsh pool-dumpxml disk-pool
<pool type='disk'>
  <name>disk-pool</name>
  <uuid>07ad41c4-dfdd-4e1d-a3f6-4feded205a88</uuid>
  <capacity unit='bytes'>2089221120</capacity>
  <allocation unit='bytes'>528187904</allocation>
  <available unit='bytes'>1561000960</available>
  <source>
    <device path='/dev/sdb'>
      <freeExtent start='528220160' end='2089221120'/>
    </device>
    <format type='dos'/>
  </source>
  <target>
    <path>/dev</path>
  </target>
</pool>

2. prepare a libvirt secret with password='redhat'
# cat secret.xml 
<secret ephemeral='no' private='yes'>
    <description>luks secret for dp vol1</description>
    <usage type='volume'>
       <volume>/dev/sdb1</volume>
    </usage>
</secret>

# virsh secret-define secret.xml 
Secret 34c1f8fa-8af7-439d-ba4f-64fc13819263 created

# MYSECRET=`printf %s "redhat" | base64`

# virsh secret-set-value 34c1f8fa-8af7-439d-ba4f-64fc13819263 $MYSECRET
Secret value set

3. Create a luks encrypted vol
# cat vol.xml 
<volume>
  <name>sdb1</name>
  <capacity unit='M'>500</capacity>
  <target>
    <encryption format='luks'>
       <secret type='passphrase' uuid='34c1f8fa-8af7-439d-ba4f-64fc13819263'/>
       <cipher name='twofish' size='256' mode='cbc' hash='sha256'/>
       <ivgen name='plain64' hash='sha256'/>
    </encryption>
  </target>
</volume>

# virsh vol-create disk-pool vol.xml 
Vol sdb1 created from vol.xml

4. Use the correct secret with the vol in vm
# virsh dumpxml avocado-vt-vm1
...
    <disk type='block' device='disk'>
      <driver name='qemu' type='raw'/>
      <source dev='/dev/sdb1'/>
      <target dev='sdb' bus='scsi'/>
      <encryption format='luks'>
        <secret type='passphrase' uuid='34c1f8fa-8af7-439d-ba4f-64fc13819263'/>
      </encryption>
      <address type='drive' controller='0' bus='0' target='0' unit='1'/>
    </disk>

# virsh start avocado-vt-vm1
Domain avocado-vt-vm1 started

5. Set another secret(uuid=799ef9b1-f855-4317-8cce-8160fc8790fd) with password='greenhat' and use it in vm
# virsh dumpxml avocado-vt-vm1
...
    <disk type='block' device='disk'>
      <driver name='qemu' type='raw'/>
      <source dev='/dev/sdb1'/>
      <target dev='sdb' bus='scsi'/>
      <encryption format='luks'>
        <secret type='passphrase' uuid='799ef9b1-f855-4317-8cce-8160fc8790fd'/>
      </encryption>
      <address type='drive' controller='0' bus='0' target='0' unit='1'/>
    </disk>

# virsh start avocado-vt-vm1
error: Failed to start domain avocado-vt-vm1
error: internal error: qemu unexpectedly closed the monitor: profiling:/builddir/build/BUILD/libvirt-4.4.0/src/util/.libs/libvirt_util_la-virbitmap.gcda:Cannot open
profiling:/builddir/build/BUILD/libvirt-4.4.0/src/util/.libs/libvirt_util_la-virauthconfig.gcda:Cannot open
profiling:/builddir/build/BUILD/libvirt-4.4.0/src/util/.libs/libvirt_util_la-virauth.gcda:Cannot open
profiling:/builddir/build/BUILD/libvirt-4.4.0/src/util/.libs/libvirt_util_la-viraudit.gcda:Cannot open
profiling:/builddir/build/BUILD/libvirt-4.4.0/src/util/.libs/libvirt_util_la-virarptable.gcda:Cannot open
profiling:/builddir/build/BUILD/libvirt-4.4.0/src/util/.libs/libvirt_util_la-virarch.gcda:Cannot open
profiling:/builddir/build/BUILD/libvirt-4.4.0/src/util/.libs/libvirt_util_la-viralloc.gcda:Cannot open
2018-06-21T07:37:45.369445Z qemu-kvm: -drive file=/dev/sdb1,key-secret=scsi0-0-0-1-luks-secret0,format=luks,if=none,id=drive-scsi0-0-0-1: Invalid password, cannot unlock any keyslot

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory, and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://access.redhat.com/errata/RHSA-2018:3113