Based on my research on this blog which mentioned content below about your issue:
When you see "unable to find vcvarsall.bat", it means you're
installing a package that has an extension module, but only the source
code. "vcvarsall.bat" is part of the compiler in Visual Studio that is
necessary to compile the module.
I think your issue occurred because that during the flask project deployed to azure, pip has problems installing the lxml library.As mentioned in this document, lxml library is written in C which requires a compiler before it's installation.
Unfortunately,a compiler is not available on the machine running the web app in Azure App Service. So, you need to do this compilation locally.
You can follow the steps as below:
Step 1:Use pip wheel command line to generate .whl file of lxml package.In addition,you can directly download generated .whl file here.

Step2:Create the wheelhouse folder under the requments.txt file's sibling directory and put the .whl file in wheelhouse folder.
Step3: Edit your requirements.txt to add the --find-links option at the top.
--find-links wheelhouse
lxml==3.8.0
Step4:Deploy your flask project to azure.
For more details , please refer to the Troubleshooting - Package Installation chapter in the official document and wheel document.
Hope it helps you.