I know I can just create a new and larger luksencrypted container and copy the contents from the previous luks container to the new one, but is there a way to enlarge a luks encrypted container (luks.img)?
I have seen several tutorials on stackexchange such as this: Extend a LUKS encrypted partition to fill disk
However, these are all for luks encrypted partitions, not containers.
Depending on what image file format your virtual disk is using, you will most likely need to use a disk utility to resize the virtual disk. Ideally, the same utility you used to create it in the first place.
If you used qemu-img to create the disk image, the command to increase your disk by 1GB would be:
qemu-img resize luks.img +1G
Since we are also talking about disk encryption, you should overwrite the new space with random noise before you expand the partition inside of LUKS to take advantage of the new space.
cryptsetupwill format and use files, it does not really help you at all in creating or managing them. So it's all up to you how you do it. There are many different ways to change a file's size; I usually do it withtruncate --sizebut if you get the size wrong the data is gone... the example shown in Windigo's answer should be safer. And then you still have to resize whatever is encrypted inside the image.